Investing in Commodities

Homes are essentially the biggest package of commodities most of us will ever purchase.

The costs for cement, steel, wood, copper and other raw materials has been skyrocketing. In fact, over the past five years, the Producer Price Index has risen 39%.

With an oversupply of homes driving prices down in many markets, the true costs of new construction have yet to be reflected in the prices of new construction homes. New housing starts are down by 33% from August 2007 levels -- the supply will begin to decline which should lead to a slow price recovery in the marketplace.

Reading between the lines, investing in commodities should be a good bet since much of the inherent value is relatively stable -- the costs of the raw materials. Before the price correction happens is the best time to purchase a new (or existing) home, hedging against potential inflation after the market begins its rise. Now is the time --- to the bold go the spoils.