Trading commoditiesCommodities play an important role as an investment class. We show you how you can invest in gold, silver, crude oil and the like.
Buying and selling of commodities
In principle, there are three different groups of commodities:
- Precious metals such as gold or silver
- Energy commodities such as crude oil or natural gas
- Industrial metals such as copper or aluminum
If you as a private investor want to trade in commodities, then you face a challenge. For with the exception of precious metals, it is probably not very practical for you to physically buy and sell such assets. A series of different exchange-traded securities exist precisely to help you, enabling you to invest in more classic products such as oil or in more exotic items, such as palladium:
- Special ETFs (exchange-traded funds) reflect indices made up of several commodities.
- Certain ETCs (exchange-traded commodities) as a rule track the performance of a specific commodity. In the case of precious metals, ETCs can also have the physical commodity as an underlying asset and securitize the right to delivery thereof, a prime example being Euwax Gold II.
- Moreover, there are various investment and leveraged products whose underlying assets constitute commodities from all segments. At Börse Stuttgart, most trading is seen in traditional derivative instruments on gold, silver and crude oil.
- Incidentally, you can of course also invest in the equities of commodity producers, such as mine operators. It bears noting here that not only the commodity price, but primarily the success of the individual company will determine the share’s performance.
Furthermore, there’s an important difference between commodities and other asset categories, namely the prices of most commodities are listed in US Dollars. For investors based in the Eurozone the exchange rate between the greenback and the Euro thus impacts on the investment – an element that can be beneficial or negative for the yield on the commodity investment.