5 Simple Commodity Investing Strategies

Prospective traders had far fewer options to invest in commodities before online trading took the stage. Today, you can speculate on commodity price movements with or without actually owning the asset.

Buy Precious Metals Through Bullion Dealer Most countries have bullion dealers, both brick-and-mortar and online shops. They allow you to buy or sell metals like gold, silver, platinum, and palladium. Some offer other commodities as bullion, too, like copper and rhodium.

Buy Stocks or ETF

Perhaps the most indirect way to trade commodities is through company stocks. For example, there are dozens of mining companies that specialize in industrial metals. By investing in these companies, you’re investing in the commodities they sell or produce.

Mutual Funds

A mutual fund consists of a brokerage combining investments from multiple sources to allocate to a particular group of assets. Much like we just discussed with ETFs, mutual fund prices are determined by multiple investment products, whether they’re indices, stocks, or other complex financial instruments.

The majority of popular commodities are accessible on national and international exchanges. Typically, futures contracts are available precious metals, common metals, soft agricultural commodities, and energy commodities.

Invest in Futures & Options Contract

Some exchanges specialize in a single category, like the London Metal Exchange (LME). Others like the Chicago Mercantile Exchange (CME) offer commodity groups, along with futures and options on products like equity indices, forex, interest rates, and more.

Contracts for difference (CFDs) are another form of derivatives. You do not own the underlying instrument, nor the contract. A CFD is an agreement between you and a third party, typically a broker, where the buyer or seller pays the difference between the contract opening and closing price to the opposing party.

Contracts for Difference (CFDs)

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