As an investor in a commodity based business, you are always have two aspects, if the commodity price increases the companies make more money, as a consumer you like to pay less. If you can make more money than you spend on the commodity it is a bonus. We saw gold prices jump as Central Banks around the world increased their gold holdings. With the war in Iran and the Strait of Hormuz being shut more than it is open, the supply of crude going to the Far East went down or prices went up. For the companies that are in the business, higher prices are the result and very often once those prices go higher, they always seem to come down slower.

In an article from the Associated Press, the biggest names in the oil and gas business reported their quarterly earnings and profits are up, a lot. Profits at BP doubled to $3.9 billion. Saudi Aramco reported a 44% increase in net profit to $32.69 billion. ExxonMobil profits double to $14 billion, Chevron reported quadrupled to $12 billion.

Shares of major oil companies are up around 20% this year and Wall Street analysts have increased expected share prices.

When big oil companies make more money, it draws the ire of politicians including President Trump who said he is not happy with ExxonMobil and Chevron’s results. President Trump wants them to cut gasoline prices, but the problem is the Strait of Hormuz and the flow of oil and gas. Will the President Trump subsidize big oil to lower gas prices? If not, there is a solution.

Linking to dividend paying stocks, when commodity prices rise, there is money to be made in the sector. The trick is to be in the sector when prices are low and allow the cycle to raise prices. If the companies pay a dividend, you can collect the dividend while you wait for prices to rise and then sell some of your holdings or rebalance them when prices are high and look for the other commodity based companies.

There are more questions than answers, till the next time – to raising questions.