If you are looking to start diversifying your investment portfolio, you might not be sure where to start. After all, there are so many options available. Maybe you are thinking about real estate.
That can be difficult, though. Flipping houses requires a lot of do-it-yourself know-how, for starters. Buying low and selling high is a long process, and not everyone wants to get involved.
You can maybe consider cryptocurrency instead. The market is incredibly volatile. A lot of the coins are not proven, at least historically. It is a relatively new type of investing and can be quite risky because of that.
What else is there? Well, commodities are one of the safest options out there. What do I mean by commodities? Let me explain.
Now, if you are looking to get into this field, there are a few different types to keep in mind. These are energy, livestock and meat, agriculture, and of course metal. The latter is largely precious metals, which is what I will focus on for this article. However, I do think it is important to briefly touch on the other types of assets.
For energy, you should watch the overall trends in politics and economics. After all, now that green sources of energy are a primary focus for many nations, crude oil is not as sound of an asset to purchase as it was before. Livestock could include hogs and chicken as well as cows.
What governs their prices of them is generally the overall supply and demand around the globe (not just in the United States). Some examples of this can be found in the cattle market. If there is some sort of widespread disruption of this market such as disease spread amongst them that kills many, the price of cattle might go up overall.
Now, that is only one case, but it can give you a general idea of what to expect if you get into commodities. For metals, a lot can impact it. If you are curious you can look at this page, but there are a few further things I will touch upon.
The entire Age of Exploration was started with the desire of the Spanish monarchs to get more of this precious metal. That led to their colonization of South America. While it was not India like they had hoped, they did find vast amounts of the stuff in this new world.
Since then, everyone has wanted a piece of the pie. That being said, gold is not the only metal that is out there for us to purchase. Silver, platinum, copper, and even steel are in this category. nly the former two and gold are in the precious metals category, though.
Now, there is some money to be had in copper and steel. With the rise of industrial powerhouses such as India and China, this metal is in lower supply and higher demand than previously. There are many dips in the market that you need to keep an eye on.
Precious metals are probably where you will find the highest value. That is relatively implied in the name, but it is still worth mentioning this. Gold might be where most of the money is, but silver and platinum still have their places. The latter is especially key in the car manufacturing process.
How to Get Involved
It might seem difficult to get into commodities, but I promise you that it is not. There are a variety of exchanges that exist in the world, such as the Orion Metal Exchange. This is for precious metals of course. If you are skeptical, I understand. You can always look at a website like this one, https://www.kingoldjewelry.com/orion-metal-exchange-review-scam-report/, to determine the validity of an exchange place.
Now, you have a few options in terms of investing in metals. You could always buy directly. Most of them come in bullion form (which is the physical bars). The preferred types are small, coin-like pieces since this makes it much easier to sell the asset in the future.
Another method is by using futures contracts. This is a contract that you make that makes a set price for an asset that you are going to buy in the future. This can protect you from market fluctuations if prices rise but are a risk as well if prices dip.
You could also try getting into this market by investing in stocks. Now, they must be specific stocks, usually for companies that are heavily involved in producing or selling those commodities. Some examples of this could be stocks for an oil rigging company or a gold mining company.
There are also exchange-traded funds (EFTs) and exchange-traded notes (ETNs). While you can trade them like stocks, they are not the same. Instead, they attempt to project the value of a commodity by using futures contracts. The intent with both is to imitate market fluctuations for the prices of the assets.
While mutual funds cannot be used to directly purchase commodities, they can be used to purchase stocks as I mentioned above. Additionally, you could get involved in a commodity pool. Just do your research and choose the method you prefer.
If you are left wondering whether investing in these asset types is worth it, that is a personal question to some extent. At the end of the day, only you can decide if they fit into your portfolio and lifestyle.
However, I can provide a bit of guidance here as well. Most of these metals do retain high values over a long period, even if they experience temporary depreciation. Overall, they are probably worth it if you are looking to add more to your folder and expand your horizons.