An outlook of most traded commodities and why an investor can invest in them
Base metals commodities:
Industrial goods are aluminum, copper, nickel, zinc, steel, etc. The movement of prices of industrial raw materials depends on the macro-economic factors in the world economy, for example, the financial turmoil in China, border tensions in Korea, etc. These products get it right when investors rely on the consumption demands of large economies such as China, India. Investors can be investing in industrial raw materials, by taking speculative futures positions via a commodity broker or trading in stocks based on commodities. Although there is no movement of stock prices one to one co??-relation between the prices of raw materials and commodities stocks, if all other things being equal, the prices of commodities constitute the most important factor in setting pricing of stocks based on commodities.
Precious metal commodities:
The precious metals commodities like gold, silver, and platinum. Gold and silver are traded at all times with high levels and market experts believe that there is room for a steeper appreciation in the medium term. My appetite for investing in precious metals has increased greatly in recent years owing to global economic uncertainty. Big global investors and central banks of some countries are investing in precious metals to protect themselves against global economic uncertainty.
Commodity trading in precious metals has had very attractive profitability over recent years. The price fluctuations in the precious metals have been opened up opportunities for traders. People might be trading in precious metals with smaller amounts at regular slots.
Agri products commodities:
Agricultural products are mainly marketed as sugar, channa, chili, pepper, soybean oil, mustard, etc. The fluctuation in prices of commodities based on agriculture depends on several local/supply factors, government policies, and product availability of alternatives. Trade-in agricultural products require the knowledge and comprehension of local different situations and problems. Therefore, agricultural products are a tough investing way in the retail sector. But there is plenty of volatility in the prices of agricultural commodities, which creates opportunities for speculative investors with high-risk hunger.
Energy Commodities include crude oil and natural gas. The movement in the prices of energy commodities is boosted by the demand for major developed countries like the U.S., China, and India. We are looking at much volatility in the price of energy owing to the global turmoil and cross-currency swaps movements. Investors with high-risk hunger can seek investments opportunities in energy commodities.
In conclusion, investors must take into account commodity trading to diversify a portfolio and as a hedge against inflation. Commodity trading advisory recommendations that an allocation of 5-10% of your portfolio could be a good reference point, but it really depends on the investor and the amount of risk you are willing to handle.