Commodity

DIFFERENT CLASSES

• Metals. 

Gold, Silver, Platinum, Aluminum, Copper, Palladium.

• Energy. 

Crude Oi, Natural Gas, Heating Oil, Gasoline, Coal.

• Agriculture. 

Wheat, Corn, Soy, Rubber, Timber.

• Livestock. 

Live Cattle, Lean Hogs, Feeder Cattle, Pork Cutouts.

BENEFITS OF COMMODITIES

• Portfolio Diversification. 

Historically, commodity funds have had low correlation with stock market movements, which makes them a valuable source of diversification in a portfolio.

• Protection Against Inflation.  

Commodity prices tend to rise with inflation, making commodities one of the few assets that benefits from inflation.

• Potential Financial Growth. 

Commodity prices rise and fall in tandem with supply and demand. The more a commodity is in demand, the higher its price will rise, delivering higher profits to the investor.

HOW TO INVEST IN COMMODITIES

• Physical Ownership. 

This is the most basic way to invest in commodities. Owning these types of commodities is usually best left to those who will be turning that commodity into a finished product.

• Future Contracts. 

Futures originated as a way for farmers to set a price for future delivery of goods. Buying and selling futures contracts requires skill and experience.

• Individual Securities. 

Shares of commodity-producing companies grant you indirect access to the commodity markets. If the commodity rises in price, the companies producing that commodity may experience increased revenues and profits.

• Mutual Funds, ETFs, and ETNs. 

These securities can provide you wide exposure with relatively low investment minimums. Funds can be specific to a particular commodity, such as gold or precious metals, or cover a broader array of commodities.

• Alternative Investments. 

Hedge funds or private investments specializing in commodities are an option. These are highly speculative and leveraged investment strategies, carrying a high degree of risk and volatility.