Playing Offense: The global economic rebound is coming, and commodities will benefit.
This global economic growth is likely to be led by China and many other emerging countries which tend to be commodity-based or commodity-heavy economies. Investing in commodities is somewhat of a back-door play on emerging market growth.
Playing Defense 1: Commodities are a hedge against future inflation.
Historically commodities have been one of the best hedges against inflation.
Playing Defense 2: Commodities are a hedge against a falling US dollar (for US investors).
Most major commodities (such as oil, gold, etc.) are priced in dollars around the world. Commodities are a good portfolio diversifier which can help reduce your overall portfolio risk.
What are the negatives of commodity investing?
1. Individual commodities are volatile and risky. For this reason commodities should represent only a small portion (15% or less) of most investor portfolios. We recommend a diversified basket approach to investing in commodities.
2. Investing in certain individual commodities can be difficult and complicated for many investors.
3. Commodity investments don't pay interest or dividends to investors.
The Powershares DB Commodity Tracking Index ETF (DBC)
This exchange traded fund (ETF) is one of the largest and most widely traded diversified commodity funds. It provides diversified exposure to the most widely traded commodities including crude oil (39% of the fund), heating oil (18%), gold (15%), wheat (15%), corn (13%), and aluminum (10% of the fund). The expense ratio on this fund is .75% which is below average for commodity funds.
Start Learning to Trade Commodities, Find Commodity Trading Courses Near You
Your decision to start learning to trade commodities will give you a completely new insight into the whole world of commodity futures trading. How do you go about learning to trade commodities? Firstly, if you are learning to trade commodities find where to do the commodity trading courses that may be on offer. Either start your commodity education at home using study materials with an online training package or attend a top quality trading school where students cover all aspects of commodities and futures.
What are the advantages of attending a commodity trading school? What are the advantages of online commodity trading packages? What is likely to be covered when you begin learning to trade commodities?
Commodity ETFs: How to Profit from Lower Risk Exposure
Commodities ETFs Save The Day
There are now hundreds of commodity ETFs available to investors. These offerings are ideal for investors seeking commodities exposure without the risk involved in playing the futures markets. Name a commodity and there's probably a corresponding ETF. As we've already highlighted, commodity ETFs significantly diminish your risk exposure. Commodities markets are notoriously volatile and it is possible to lose more than your initial investment on a commodities contract if you're not careful.
What Makes Commodities ETF Different
Now if you're looking for a commodity ETF that actually holds the physical commodity, gold is the area you might want to look.
Commodities Have Long-Term Potential
Well, that certainly applies to commodities as well. The Trend Is Your Friend With Commodities ETFs
Bullish commodity trends can last for extended periods and commodities don't need a bull market in stocks to have bull markets of their own.