Commodity Trading

Recent volatility in financial markets has driven growing investor interest towards commodities trading. Institutions, global hedge funds, fund managers and central banks are beginning to shift their asset allocations away from equities and cash to commodities such as gold, oil, silver and grains in order to diversify their portfolios and take advantage of growing demand from emerging markets.

Instability in Europe and the US, has resulted in investors shifting away from the USD into hard physical assets – and this trend is set to continue.

Commodities make up a large part of many stock markets around the world. Some of Australia's biggest companies are involved in mining and commodities.

Trading and investing in commodities is fast becoming an accepted practice and a market that is opening up to just about anyone that has an interest, Gone are the days when only a select few had the opportunities to invest in and make money in the commodities markets. Precious metals, ores, food crops, oil, energy, fish, are all commodities being offered as investment vehicles to the participating public. New investors are signing up daily, seeking a controlled and mostly passive income online.

The trading of commodities consists of direct physical trading (utilizing spot, forwards, futures contracts) and through derivatives trading. Exchange traded commodities have seen an upturn in the volume of trading since the start of the decade. This was largely a result of the growing attraction of commodities as an asset class and a proliferation of investment options which has made it easier to access this market.

Commodity assets under management more than doubled between 2008 and 2010 to nearly $380bn. Inflows into the sector totaled over $60bn in 2010, the second highest year on record. Take for example Gold – when global equities and property prices are plunging, the price of gold has increased by over 80% in just twelve months. Silver, Copper and soft commodities such as rice, corn and wheat have also increased exponentially over the past two years , largely due to a shift into urbanisation and a growing investor appetite.

Click here to find out how you can make money trading commodities today.

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