What is a commodity?Commodies

Commodity, English is Commodities The commodities usually refer to the raw materials that can be traded in financial transactions, including various raw materials in agriculture, animal husbandry, energy fields and metal fields, such as gold, silver, oil As well as natural gas, Corn, wheat, soybeans, wood, etc.are all commodities.

Commodity Trading is a kind of financial wealth management products.The prices of the main raw materials in some industries and agriculture are used as the object of investment.Investment transactions are conducted through stocks, funds, futures contracts or ETFs to help investors do not hold it in the same wayIn the case, investing in commodities, the commodity transactions can enrich the investment portfolio compared to investors, play a role in hedging risks in some investment areas, and can play a certain amount of asset protection in an inflation environment.Function, so it is favored by many investors.So what are the commodities?How can we make commodity investment?

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Directory of this article

• What is a commodity?
• What are the commodities?
• What are the ways to invest in commodities?
• What is a commodity ETF?
• What are the large commodities in the market?
• What factors should be considered in investing in commodities?
• What are the risks of investing in commodities?
• Grand Commodity VS stock investment
• More investment strategies

What is a commodity?

The difference between other products is that commodities are usually the basic raw materials of various industries and have stable market demand.Therefore, the price trend of commodities has a certain degree of judgment.Therefore, in the field of investment, a variety of financial products that invest in the prices of these products have been developed, including stocks, futures, funds and ETFs.

When the price of commodities is used for financial investment, it is called “commodity transaction”.English is the Commodity Trading, which refers to financial investment containing a variety of large commodities including stocks, futures, funds and ETFs.

There may be the following advantages to conduct commodity transactions:

• There are many commodities, involving multiple fields, and the cause of the price fluctuations in commodity commodity may involve a wider economic situation.The correlation with stocks and bonds is low.Items
• In addition to decentralized risks, the commodity transaction can also play a certain role of hedging risk.For example, if investors invest in airlines, usually, airline stocks will fall due to the rise in oil prices.Energy-related commodity transactions can effectively hedge the risk of stock investment loss due to rising oil prices;
• The price of commodities usually fluctuates according to the development of inflation.Therefore, in an environment of inflation, commodity transactions can reduce the adverse effects caused by inflation.

What are the commodities?

The overall commodities can be divided into soft products and hard products, soft goods refer to agricultural and animal husbandry and other categories, and hard goods refer to the energy field and metal field.

The futures transactions of these commodities are traded on the world’s important exchange.These exchanges include:

Energy commodity

2.Metal commodity

Industrial metal

Industrial metal refers to metal raw materials mainly used in the industrial field.

Precious metal

Metals are mainly used for collecting value preservation or extremely rare metal raw materials.

3.Agricultural commodity

Farming

Animal husbandry

forestry

What are the ways to invest in commodities?

When introducing large commodities into the field of financial investment, it can be invested through the form of commodity stocks, ETFs of the commodity commodity, the commodity common fund, and the commodity futures contract.

Purchase commodity directly

The most primitive way to invest in commodities is to invest in the physical investment of commodities, that is, directly buying commodities from dealers, such as gold bars and gold coins, and properly keep it, and then sell it to dealers when the price is appropriate.

advantage:

There is no third-party middleman, and all the income during the investment process is investors.

shortcoming:

You need to provide enough space to store large commodities properly;

During the transaction, transportation costs are needed.

2.Grand Commodity Futures Contract

Future Contracts is the most important type of commodity transaction.It originally originated from the expected future prices of commodity operators, signed a fixed amount of future transaction contracts with the buyer, and conducted product delivery on product delivery in the future expiration date.At the time, the difference in the difference may also suffer the loss of the difference.

The futures contract of commodities is mainly traded on the commodity exchange.The two largest futures exchanges in the United States are Chicago Commodity Exchange and New York Commodity Exchange.

After entering the futures market, investors began to invest and invest in large commodity futures contracts.Generally, the trading model is similar to ordinary futures transactions, but the difference between ordinary futures transactions is that the influencing factors of risks are broader and more abundant.

advantage:

• There are a variety of commodity futures contracts in the market for transactions

shortcoming:

• The commodity futures transaction is still the most risk-up transaction method in various commodity transactions in large commodities transactions

3.Grand Commodity Stocks

The investment in commodity stocks is the most direct investment method.Investors can choose a company engaged in a certain commodity company for investment.For example, investors interested in the metal field can buy stocks engaged in platinum mining companies.

advantage:

• Simple investment method
• The selected range is rich

shortcoming:

The risk of profit and loss is more focused on the company’s operating capacity, and the leading role of commodity prices on investment profit and loss has been reduced.

4.Grand Commodity ETF

The commodity commodity ETF is an exchange trading fund that integrates multiple commodity stocks, funds or futures.It can be flexibly traded and sells like stocks.The price is constantly changing throughout the trading day.Among them, the price of commodity prices has more dominant investors in transaction profit and loss.

advantage:

• Flexible trading method;
• The dominant role of commodity prices in the profit and loss of investment transactions is more than that of commodity stock transactions.

shortcoming:

At present, the number and types of ETF products for commodities in the market are limited.If you want to invest in large commodities of specific categories, you may need to find commodity transaction products in other investment methods.

5.Commercial Common Fund

The commodity common fund provides investors with more investment options.Fund managers will choose different products in different products of commodity commodity physical materials, commodity stock investment, and different products in the commodity futures contracts based on their own judgment.

Therefore, investors can make more types of investment with fewer investment funds, and they can also be exposed to various types of commodity transactions while decentralizing investment risks.

advantage:

• There are more types of investment products contained in the commodity common fund;

shortcoming:

Investment profit may be reduced as the wind decreases.Investors who want to make high-risk and high-return investment need to find other investment products.

What is a commodity ETF?

The ETF of the commodity commodity is a way to simply plan the target commodity transaction into a personal investment portfolio.In the case of not holding the actual commodity, it will conduct more comprehensive investment in commodity types and types of transactions.

The commodity ETF mainly includes a variety of financial products and derivatives such as commodity stocks, commodity futures, and commodity price indexes.

In a large commodity ETF, according to the decision-making of the fund manager, it may include a variety of financial investment products of a certain type of commodity, or a variety of financial investment products of a variety of large categories, such as Ishares S & P GSCI.Futures contracts involving farming, animal husbandry, and industrial metal areas.Investors can decide which commodity ETF can be decided based on their actual investment goals and investment habits.

At present, the most popular commodity ETF in the market is an ETF product in the field of precious metals, such as Gold ETF: SPDR Gold Shares and Silver ETF: Ishares Silver Trust.

Another more concerned is the ETF product in the energy field.Unlike precious metals, because large commodities in the energy field, such as oil or natural gas, cannot be stored for a long time like precious metals.The proportion of futures contracts will be relatively large.At present, the most well-known Energy ETFs include SPDR S & P Oil & Gas Explration and Production ETF.This ETF has a diversified investment portfolio consisting of 56 oil or natural gas companies.

Advantages of commodity ETF

• The transaction of the commodity ETF is more flexible than the fund and the fund.It can conduct flexible transactions like stocks, and the price of the ETF of the commodity commodity ETF will continue to change in each trading day, so it is very suitable for investors who invest in short-term investment;
• Another advantage of the Great Commodity ETF Investment is that capital gains tax will not be incurred before the sale of ETFs, so compared to other investment products, such as common funds, have tax advantages.One of the reasons.

What are the large commodities in the market?

At present, the large commodity ETF on the market can be traded in the stock market, and you can also invest in some asset management institutions.ETF list.

Issuing financial institutions for commodities ETF

Grand Commodity ETF

What factors should be considered in investing in commodities?

When investing in commodity transactions, it mainly needs to consider the types of commodities, the laws and demand laws of large commodities, and the highest profit that can generate the minimum cost.

1.Consider the types of commodities

At present, the most popular commodity species in investing are: crude oil, gold, industrial metal, etc.

crude:

Crude oil is currently the most important energy product.Crude oil can not only refine gasoline, but also use asphalt, fertilizer, plastic, solvents, and cosmetics.The market’s demand for crude oil has a relatively stable demand.Commodities, so it has become the investment target of most investors.

gold:

Gold investment has a long history.In the history of financial investment, the performance of gold in terms of inflation has made it the most attractive precious metal investment product.At the same timeEssence

Industrial metal:

The demand for industrial metals in the world can be said to be second only to oil, which makes it have the same relatively stable investment market.There are a large number of industrial metal financial investment products in the market.Therefore, investors can have more choices to come to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more options to come to come to come to make more choices to come to come to come to make more choices to come to come to come to make more choices to come to make more choices.Plan your own investment portfolio for more effective financial investment.

In addition to these categories, such as multiple categories in farming and animal husbandry, because of the meal food and clothing involving the global population, it also has good types and quantities of financial products.

2.Consider the laws and demand rules of commodities

The characteristic of commodities is that in the industry of each individual product, the products provided by suppliers are basically the same.It is difficult to cause price differences due to different suppliers.It is better to cause company A’s price to be higher, but if Company A is a mobile phone supplier in Company B, it is likely to cause higher prices because Company A is better.

Therefore, in the trading environment of commodities, the price of supply and demand that determines the price fluctuates is the overall environment.For example, during the COVID-19 period, due to the decrease in labor force, the supply of wood decreases.Because the Russian and Ukraine War caused the shortage of oil, it caused a rapid rise in oil prices.

When traders invest in commodity transactions, they need to pay attention to the supply and demand relationship of target products in a more overall environment.

3.The highest profit can be generated by the minimum cost

As the raw material supplier of various industries, the lower the cost of the commodity industry, the better the cost of the commodity industry, because when the market fluctuates, even if the price of other products decreases, as long as the market needs this product, it will be in the market, but as long as the market needs this product, it will be in the market.The corresponding commodity, even if the profit is very low, still has profits to earn.

What are the risks of investing in commodities?

Although the influencing factors that lead to fluctuations in commodity transactions are more broader than ordinary transactions, there are still many risks when investing in commodity commodities.

1.Main risk

In the process of commodity transactions, the main risk impact factor is world incidents, global competition, government regulations, import control and obvious changes in economic conditions.These factors will have a rapid and direct impact on commodity transactions.People need to pay attention to the dynamics of countries and world policies related to the target commodities in a timely manner.

2.Consider the international economic environment

In addition to the commodity itself, a variety of countries, international policies, and events in the field of commodity products will cause commodity transaction risks, and international monetary policy will also cause commodity transaction risks.Because most of the commodities are international trade, soChanges in currency exchange rates will affect the price trend of commodities in related countries, which will lead to fluctuations in the trading market.

3.Assets are too concentrated

Because the number of large commodities is relatively small than other industries, when investing in commodity transactions, the assets are relatively concentrated, and the number of ETF products for commodity transactions is currently limited.Assets are easily concentrated in a certain field, and when the market fluctuates, it will be more significant.

Therefore, in actual investment, it is suitable for the commodity transaction as part of the investment portfolio, not all.

4.Other risks

Funds with commodities as the main objects usually use goods contracts to track the price or price index of the target product, but futures contract investment is highly speculative investment and has great volatility.ThereforeThere is a huge difference in its own performance, which eventually leads to an wrong judgment in investors.

Grand Commodity VS stock investment

The commodity transaction and stock investment usually have certain negative correlations or low correlations.For example, when oil prices rise, stocks related to oil may fall, but the commodity trading market will rise.

The difference between the two is:

More investment strategies