Moreover, Idzorek thinks there is little risk that commodities will dramatically underperform other asset classes on a risk-adjusted basis over any reasonably long period and suggests an optimal allocation range between 9% and 14%.

Near The Top?
While Idzorek makes his case statistically, a problem may come in applying his conclusions in the real world. Commodity prices are notorious trend animals. If an advisor moves his clients into this arena late into a rally and then suffers a significant drawdown, he may be tempted to get out before the sell-off bottoms and prices rally into the next uptrend.

Indeed, moving capital into commodities at this time could mean investing in a bubble where some prices have gotten well beyond their underlying fundamentals. Within a matter of a few days in the second half of July, the S&P/GSCI index sold off 10%. A similar rebalancing may be in store due to the events transpiring in the days after the bankruptcy of Lehman Brothers and the massive government loan to AIG when precious metals saw double-digit increases and agricultural commodities plummeted.

Before commodities began selling off in July, JP Morgan's Chief Market Strategist David Kelly thought there was inordinate risk in energy exposure (which, we remind you, currently represents more than three-quarters of the S&P/GSCI index). He said at that point, "Buying oil and many other popular commodities is more speculation than investing and not consistent with basic long-term principals of fundamental wealth management."

Kelly agrees prices have been driven by strong demand and insufficient supplies and exacerbated by geopolitical concerns. But he also sees the price being pushed forward by the increasing use of oil as a hedge against a weak U.S. dollar; by the huge flows into commodity funds; and by a surge in speculative trading of oil futures by disinterested players.

AIG Financial Products projected that $200 billion alone has been directed into commodity index funds worldwide over the last year through the end of June. However, Eric Kolts, commodity indexes product manager at S&P, thinks the market is large enough to handle that influx of capital without seriously moving prices.

With the doubling of oil prices over the last year, Kelly does see a bubble forming. But because the oil markets are an amalgam of unpredictable forces, he thinks shorting is also a dangerous prospect.

Edward L. Morse, who was Lehman Brothers' chief energy economist, is downright bearish about oil and regards the current market as "Dot-Com II." Before crude started sliding, he said oil inventories will start building up this fall. Production at deepwater wells will increase with the arrival of new extraction equipment. Refinery capacity will expand over the next five years, and will be capable of processing dirtier crudes. Just as important, he suspects that Chinese growth will slow after the Olympics. By year's end, Morse thinks oil will have collapsed below $100.

But then there are folks like those at Goldman Sachs who are predicting oil will hit $200.

Gaining (And Understanding) Exposure
High-net-worth investors can access two commodity-focused investment vehicles: hedge funds and partnerships. The most transparent type of hedge funds are commodity trading advisors (CTAs). Their investment positions and performance are reported monthly, collected by firms that follow the industry.