Thursday, December 14

Buying Commodities Without a Commodities Account

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Buying Commodities without a Commodities Account

The first way to buy commodities is by taking physical possession. Since commodities can be soft (such as wheat or soy) or hard (gold or silver) this can depend on the commodity of choice. Technically, you could buy bushels of wheat and then resell them if prices go up, but this is a laborious process and you will only want to do so if you have expertise in storing grains and transporting them. However, for hard commodities such as gold, you may want to actually take possession.

Taking possession of hard commodities is possible, but you will want to have a reputable dealer. The industry of gold and silver dealing (as well as for platinum) is full of shady characters who will often rip-off consumers who are not savvy with buying coins or metal bars. One dealer that is purportedly honest is Kal Gronvall and you can contact him at goldandsilverexchange.info.  While I have not personally bought gold or silver from him, he does seem to have an honest reputation. However, it may be best to speak to several dealers before making a purchase. Just be careful and do your research. By purchasing gold, silver, or other metals directly you can be sure that you are maintaining your wealth. Just be sure to keep your metals stored in a secure location.  If you need ideas, you can check this article on 10 Ways to Hide Gold.

Another way to buy commodities is by having a regular stock trading account with any online or offline firm that offers stocks. You can do this by purchasing commodity ETFs. “ETF” is short for “exchange traded fund”. ETFs are traded in the same manner as stocks are and if you have any experience trading stocks, you will find the experience to be the same.

Commodity ETFs vary as some only are based on the price index of materials while others take possession of the actual commodities. If given the choice, particularly with hard commodities, you should probably chose a commodity ETF that takes possession of the commodities as the prices will more likely reflect reality. Before you purchase a commodity ETF, do your research and read about the ETF. One thing to take note of is that commodity ETFs that don’t take physical possession of the commodity may be leveraged and can double (or more) your risk (as well as potential profits).

There are dozens, if not hundreds of commodity ETFs to choose from and you can find a list of them here at etfdb.com.

As the world’s population continues to grow and consumption rises, commodities have a bright outlook over the next several decades as many commodities will continue to be squeezed. There is only so much farmland, oil, gas and metals that can be taken from the earth so price pressure should continue on an upward trajectory.

All-in-all the outlook for commodities ETFs is bright and you may want to consider purchasing them as an option if taking physical possession of a commodity is not in your plans.

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