Before money was numbers in a ledger, it was metal in a hand. Gold and oil still sit underneath the financial system — one as the world's oldest store of value, the other as the price of making anything move.
Gold: five thousand years of distrust insurance
Gold pays no interest, earns no profits, and mostly sits in vaults — yet it has held value across every empire, currency, and crisis in recorded history. It is the asset people buy when they distrust the other assets: its price tends to rise with inflation fears, war, and falling faith in currencies. Central banks themselves hold about a fifth of all the gold ever mined, and have been net buyers every year since 2010 — quiet diversification away from the US dollar.
Until 1971 the dollar was formally convertible to gold (the 'gold standard'); when President Nixon ended that, money became fully fiat and gold became what it is now: not money, but the thing people measure money's decay against. A small allocation (many suggest 0–10%) is a hedge, not an engine — over long periods stocks have crushed it.
Oil: the price of everything moving
Oil is embedded in the cost of every shipped good, every flight, every plastic — so when crude spikes, inflation follows within months, and central banks tighten in response. Most postwar recessions were preceded by an oil shock. Its price swings on OPEC's production decisions, wars in producing regions, and global growth itself, all priced in US dollars — the 'petrodollar' arrangement that reinforces the dollar's reserve status.
For Canada, oil is personal: energy is a top export, so the loonie tracks crude closely, and the TSX leans heavily on energy and the banks that finance it. A Canadian household with a job, a home, and a maple-flavoured portfolio already has more oil exposure than it thinks — an argument for owning some of the world, not just Canada.
Commodities in a portfolio
Wheat, copper, lithium, natural gas — raw materials trade like oil, mostly through futures markets where producers and buyers lock in prices and speculators take the other side. Commodities zig when much else zags (they loved 2022, which stocks and bonds hated), but they produce nothing and cost money to hold, so most households are better served treating them as seasoning: a small hedge against inflation, mostly via broad funds — not a main course.
The takeaways
- Gold is insurance against distrust in currencies — a hedge, not a growth engine.
- Oil shocks feed straight into inflation and have preceded most modern recessions.
- The loonie and the TSX are heavily commodity-linked — Canadians are born overweight oil.
- Commodities are seasoning in a portfolio, not a main course.
Words used here — look them up
Educational content, not financial advice. Figures like contribution limits and benefit amounts change annually — verify against CRA, IRS, or your provider before acting. ← All fundamentals