Investing in commodities is associated with a high degree of price volatility and the risk of capital loss. Commodity prices can be susceptible to sudden and significant fluctuations, resulting from a number of factors, including weather conditions, changes in government policy, geopolitical events, and global economic trends.
Choose your raw material
Investors should be aware that investing in commodities may not be suitable for everyone, especially those with a low risk tolerance. At the beginning, it is worth considering investing in raw materials with a stable history and widespread use in the global economy, such as:
- Petroleum
It is one of the most important energy resources in the world. Its price is trending for a long-term increase. Investing in crude oil can be beneficial because of its importance in energy production and its wide range of applications in the chemical and transportation industries.
2. Gold
Traditionally considered a “safe haven” for investors during periods of geopolitical uncertainty. Its value often increases in times of inflation. Investing in gold can serve as a form of hedging your investment portfolio.
3. Silver
Silver is a precious metal with a wide range of industrial applications and a popular investment asset. The price of silver is less susceptible to speculation than the price of gold, but at the same time it depends on many other factors, such as demand in the electronics or photovoltaic industries.
4. Copper
It is one of the most important industrial metals. The price of copper is often considered an indicator of the state of the global economy, so investing in copper can provide signals about the health of the market.
Regardless of the chosen investment formula and the specific raw material – you should never invest funds that you cannot afford to lose (e.g. needed to repay current liabilities).
Where to start investing in commodities?
Commodities are often used as a hedge against inflation, as their prices can rise as the cost of living rises. Moreover, they tend to retain value over the long term, making them attractive options for investors seeking to build a long-term investment portfolio. Investing in commodities also allows you to diversify your investment portfolio, which helps to minimize risk and increase the stability of your investment.