Investing in commodities can be an effective way to diversify your portfolio and hedge against inflation or economic uncertainties.
Direct Investment:
Physically purchasing the commodity (e.g., gold bars or agricultural products)
.Commodity Futures:
- Contracts to buy or sell a specific amount of a commodity at a predetermined price and date.
- Traded on exchanges like the Chicago Mercantile Exchange (CME).
- High risk due to leverage and price volatility.
Commodity ETFs/ETNs:
- Exchange-Traded Funds (ETFs) or Notes (ETNs) track the performance of commodities or commodity indices.
- Examples: SPDR Gold Shares (GLD), United States Oil Fund (USO).
Stocks of Commodity Companies:
- Investing in companies involved in commodity production (e.g., mining companies or energy producers).
- Examples: ExxonMobil for oil, Barrick Gold for gold mining.