By: Hillel Fuld
If you are looking to invest in one of the global financial markets, commodity trading should be on the top of the list. This is true for many reasons, but the primary one being that the world will always need commodities, and therefore, there will always be commodity trading. Combine that with the fact that as time goes by, we have fewer commodities to speak for and you got yourself a winning combination.
In recent years, the world’s resources are not as easy to come by as they were in the past. Even given the world’s advancing technologies, we have to dig much deeper to find oil and mine a whole lot more dirt to find copper. This combination is of course the ideal scenario for any investor. A resource that is scarce and highly needed is a magical team that will inevitably lead to a successful investment. Meet commodity trading!
An additional advantage of commodity trading is diversity. No smart investor would put all their eggs in one basket, and while you might be investing in stocks and bonds, Forex, or other financial markets, commodity trading will add variety to your portfolio. Historically, commodities behave with a very low correlation to other markets, which means that while other investments might lead to losses, they will balanced out by your commodity trading.
Some of the foundations of the global economy include agricultural goods, livestock, metals, oil, and gas. All of these resources generally fluctuate in the opposite direction of stocks and bonds. Not only that but natural resources offer a highly effective hedging mechanism against the dollar, since historically speaking, when the greenback falls, their value increases.
All the above reasons might give you a little nudge, but when push comes to shove, most people are looking to make money with their investments. Commodity trading in general, and especially now, is an intelligent investment. The most recent global economic collapse caused a major decrease in commodity pricing, however, due to its staple like status, commodities are on their way up. Industrial production and retail sales, two primary indicators of commodity demand are both on the increase. Commodity prices themselves are also displaying an increase with copper pricig doubling in 2009.
The long term outlook is by far the most compelling argument to invest in commodity trading. Experts predict that we should be preparing for a shortage of resources like nothing we have ever seen outside of war. This will obviously make prices skyrocket and provide a steep return on your investment when it comes to commodity trading.
In order to invest in commodity trading, no one expects you to become an expert on oil, pork bellies, or tin. You can simply find a commodity broker and invest in exchange traded funds (ETFs), which give you a broader exposure to natural resources. Experts recommend to invest 5-10% of your portfolio in commodity trading.
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| Symbol | Change | High | Low |
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| EUR/USD | 0.0014 | 1.3287 | 1.3273 |
|---|---|---|---|
| AUD/USD | -0.0033 | 1.0788 | 1.0763 |
| EUR/GBP | 0.0013 | 0.8399 | 0.8399 |
| EUR/JPY | 1.04 | 103.21 | 103.06 |
| GBP/USD | -0.0009 | 1.5819 | 1.5808 |
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| USD/JPY | 0.7 | 77.73 | 77.64 |
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