Skip to main content

Commodities Investment options

Some options for investors in commodities


   The trading volume in the commodity markets here is picking up with every passing day, as more awareness is being created among the investor community. Electronic trading in commodities makes it easier for individuals and small investors to trade in them. Investments in commodities can be made by day traders as well as medium to long-term investors.


   Trading in commodities is a bit different from trading in stocks. The prices of commodities fluctuate based on the demand and supply in the global markets. There are various factors that influence and play a key role in deciding the prices of various commodities. Rainfall, sowing-harvesting cycle, government polices and macroeconomic outlook are some of them. There has been considerable volatility in commodity prices over the last few months due to the global uncertainty, speculation on demand in China, dollar and euro weakness etc. Investments in commodities come with higher amount of risk than equity but they are rewarding as well if made with proper due diligence.


   Commodity trades are highly leveraged. It means the margin requirements for trading in commodity futures is quite low in comparison to the total holding. Therefore, it magnifies the gains and losses an investor can incur while dealing with commodities.


   These are some of the main categories of commodities presently traded in the markets, their outlook and ways an investor can invest in them:

Industrial commodities    

Industrial commodities include aluminum, copper, nickel, zinc, steel etc. The price movements in industrial commodities mainly depend on the macroeconomic growth in the global economy. These commodities do well when investors feel confident on consumption demand from large economies.


   Investors can go for industrial commodities with speculative future positions through a commodity broker or invest in commodity based stocks. It is important to note that there is no one-to-one correlation between commodity prices and commodity stock price movements. However, if other factors are constant, the commodity prices do form the most important factor in the pricing of commodity-based stocks.

Precious metals    

Precious metals include gold and silver. Usually, it is seen that investors' interest in precious metals goes up during global uncertainty periods, as precious metals are treated as a safe investment haven. Investors can invest in precious metals through future positions, buying gold exchange-traded funds (ETFs), or by buying physical gold or silver.


   Most of the times, small investors take positions in precious metals (gold or silver) which is easier to maintain and handle. However, the physical positions in precious metals come with liquidity issues and are difficult to hold. Gold ETFs provide good investment options to small investors as they can be easily liquidated in the markets, and can also be stored electronically in a demat account.

Agricultural commodities    

The category of agricultural commodities includes sugar, channa, chilli, pepper, soya, mustard oil etc. The price fluctuation in the agriculture-based commodities depends on various local factors, production and supply, government policies, and the availability of alternatives. Trading in agricultural commodities requires a lot more knowledge and understanding of the local issues. Therefore, agricultural commodities are difficult investment avenues for small investors.

Energy commodities    

The category of energy commodities includes crude oil and natural gas. The price movements in energy commodities are driven by speculation on demand in large, developed nations such as the US. The prices of energy commodities ruled quite firm when the world economy was booming in 2007-08 and nosedived after the sub-prime crisis in the US.


   Investors can take exposure to these commodities with speculative future positions through a commodity broker or invest in energybased stocks.

 


Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now