Commodities are no longer sitting quietly in the background of portfolios.
On this episode of Lead-Lag Live, Melanie Schaffer sat down with John Love, President and CEO of , to unpack what’s driving the resurgence in natural gas, crude oil, gold, silver, and beyond — and what it means for portfolio construction in a world defined by geopolitical risk and macro uncertainty.
Below are the key takeaways.
Natural Gas: When “Ample Supply” Isn’t Enough
Natural gas prices surged sharply following a severe winter storm that swept across much of the U.S. While weather-related spikes are common during the winter months, this move stood out for its magnitude and persistence.
Love explained that although the U.S. entered the storm with relatively healthy storage levels, the severity, duration, and infrastructure strain altered the supply picture in real time. In past episodes, markets would spike on forecast uncertainty and then retrace once the storm passed. This time, the market recognized the scale of the disruption and continued repricing higher.
The broader message is straightforward. Even in a country that produces and exports significant volumes of natural gas, supply can tighten quickly when infrastructure meets extreme weather. Scarcity, even if temporary, drives price.
Oil: The Geopolitical Risk Premium Has Returned
Crude oil has also been climbing, with Brent moving higher amid renewed geopolitical tensions, including developments involving Iran and broader Middle East uncertainty.
Love noted that underlying supply-demand balances have fluctuated, particularly as OPEC+ has adjusted production policy in recent years. However, geopolitics introduces an unpredictable and asymmetric layer of risk. Roughly one-fifth of global oil flows through the Strait of Hormuz. Any credible threat to that chokepoint injects a risk premium into prices.
Not every geopolitical development carries the same weight. Venezuela’s political shifts, for example, have had limited immediate impact due to structural production challenges and the long timeline required to restore meaningful output.
The takeaway is that even in markets that appear balanced on paper, geopolitical uncertainty can sustain an elevated risk premium longer than many expect.
Gold, Silver, and the “Perfect Storm” for Precious Metals
Precious metals have been one of the strongest performing segments of the commodity complex.
Gold’s multi-year rally has been supported by steady central bank accumulation, investor diversification flows, currency concerns, and heightened geopolitical uncertainty. What began as institutional demand has broadened as more investors look for portfolio ballast.
Silver and platinum, which lagged gold earlier in the cycle, have recently accelerated. Historically, when the gold-silver ratio becomes stretched, the adjustment often comes through silver catching up. That dynamic has started to unfold.
With equity valuations elevated, policy uncertainty lingering, and macro risks still in play, precious metals have benefited from a convergence of supportive forces. Pullbacks are always part of commodity cycles, yet structurally the environment has favored safe-haven assets.
Broad Indexes vs. Selective Exposure
One of the most important parts of the conversation centered on how investors access commodities.
Traditional broad commodity indexes are typically weighted by production or liquidity. That structure naturally skews portfolios toward energy and gold. There is no market capitalization framework in commodities, so methodology matters.
Love emphasized that while broad exposure offers a useful macro snapshot, it may not be the most precise way to capture opportunity. Commodities are inherently idiosyncratic. Cocoa, cattle, natural gas, oil, and gold each respond to distinct supply disruptions, weather patterns, and geopolitical catalysts.
USCF’s SDCI ETF, for example, applies a rules-based process designed to emphasize commodities that appear relatively scarce while avoiding those in abundant supply. Rather than owning everything proportionally, the strategy aims to tilt toward tighter markets and rebalance monthly.
The objective is not to eliminate exposure to core commodities, but to avoid overconcentration and potentially capture less obvious winners when scarcity shifts across sectors.
The Role of Income in Commodity Strategies
For income-focused investors, commodity futures-based ETFs are not direct substitutes for fixed income. However, because futures require margin rather than full capital deployment, remaining collateral is typically invested in short-term Treasury instruments. That collateral component can generate income tied to prevailing T-bill rates.
USCF also offers option-overlay approaches on gold through USG, seeking to generate additional income through options strategies while maintaining gold exposure.
Commodities remain primarily a diversification and inflation-sensitive tool within portfolios rather than a traditional yield solution.
The Bigger Picture
From natural gas shocks to oil’s geopolitical premium to precious metals’ resurgence, the common thread is scarcity.
Commodities are not a single trade. They are individual markets, each influenced by its own supply constraints and demand shifts. In an environment defined by tariffs, geopolitical tension, central bank repositioning, and climate-driven disruptions, scarcity cycles may become more frequent and more pronounced.
For investors who have largely ignored commodities in recent years, the message is clear. When global stability is questioned and macro uncertainty rises, real assets often reassert their relevance.
To learn more about USCF’s research and lineup, visit USCF Investments’ website and explore their published commentary.
Stay tuned for more episodes of Lead-Lag Live.
The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.
