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Investing in Commodities

A large group of people, especially in India, equate commodities with precious metals like gold and silver or crude oil.

However, the commodities space offers much more. Think soyabean, grains, spices, pulses, etc.

Wondering how to invest in commodities? Let's find out...

Investors can invest in commodities via futures contracts or exchange traded products that directly track a commodity index.

Although these investments can be highly volatile and are generally carried out by experienced investors and traders.

Another way to gain exposure is to invest in companies that have commodity-related businesses.

For example, buying Hindalco shares gives exposure to non-ferrous industrial metals like aluminium and copper.

Investors can also invest in commodities via mutual funds. These are funds that invest in a portfolio of commodity-related companies.

For instance, an oil and gas fund would invest in equity shares of companies involved in energy exploration, refining, storage, and distribution.

Note that the returns of directly investing in commodities differ from investing in commodity related stocks. But so does the risk factor.

Commodity investing has its own advantages:

  • Potential hedge against inflation: Inflation, which erodes the value of money, often means higher prices for commodities. Commodities have historically shown healthy performance in periods of high inflation.
  • Diversification: The addition of an asset class that is different from other stocks and bonds can help you better manage market volatility.

Alongside, commodity investing has its own risks:

  • Sensitive to global events: The commodity industry is significantly affected by worldwide competition, government regulations, and economic conditions.
  • High volatility: Issues with liquidity and potential exposure to natural disasters makes the asset class more volatile. Imagine crude oil futures going to negative prices!

Since you are interested in commodities, check out the top commodity stocks in India.

Meanwhile, also check out the below videos where India's #1 trader Vijay Bhambwani discusses whether you should invest in commodity stocks and whether commodity trading is for you.

Shadow Inventories and Commodity Trading.

Should You Invest in Commodity Stocks?

Gold vs Silver: A Trading Opportunity

Feb 23, 2023

Should you trade gold or silver? Find out...

Is the Bull Market in Metals Over?

May 5, 2022

Metal prices are down sharply. Is the metals supercycle over? Find out...

Sugar Sector: Sweeten up the Deal

Mar 14, 2022

Sugar sector is trending bullish amid the market correcting and most of the sugar stocks are trading at all-time high.

An Exciting New Trading Opportunity

Jan 14, 2022

There's a new trading opportunity on the horizon. Get ready...

Crude Oil or Natural Gas: Which is the Better Trade Now?

Nov 26, 2021

This is when you should trade crude oil and natural gas.

Our Energy Trade

Aug 31, 2021

In this video, I'll show you why our energy blueprint is still intact.

How the Robin Hood Conference Will Affect Your Trades

Jun 14, 2021

A big event is coming up which will have an impact on our commodity trading.

Why Falling Oil Prices Aren't Boosting Equities

Jun 24, 2022

In this video, I'll explain why the stock market is not going up when crude oil prices are falling.

When Can You Trade Commodities Normally Again?

Mar 25, 2022

In this video, I'll share my view on when you can expect to trade commodities normally again.

Nifty Energy Index: Don't Miss the Bus

Mar 11, 2022

The index is trading around 24,800 level, just near the breakout of bullish or inverted head and shoulder pattern which is placed at 25,100-25,250 zone.

2022: A Year for Commodity Traders

Dec 16, 2021

This is why I think 2022 is going to a great year for commodity trading.

This is Why Metal Stocks are Falling

Oct 28, 2021

A relatively unknown segment of the market is cautious on metals. Here's the secret sauce...

Shadow Inventories and Commodity Trading

Jun 15, 2021

Should you be worried about shadow inventories while trading commodities? Find out...

Emerging Challenges of Commodity Trading in India.

Jun 18, 2019

Behavioural Technical Analysis, Copper trading, Commodities, hard assets, Base metals.