How to invest in commodities?

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pa33

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Does anyone know the best way to put money into commodities as Jim Rogers recommends?
 
pa33 said:
Does anyone know the best way to put money into commodities as Jim Rogers recommends?
Click to expand...

Buying shares of a commodities ETF such as symbol DBC is one example.
Here's a listing of 146 different commodity-related ETFs
http://www.bloomberg.com/apps/data?Sector=913&pid=invest_mutualfunds&ListBy=YTD&Term=1&x=18&y=3

You could also buy stocks in companies that produce commodities but this will balance the anti-dollar/commodity play with a stock play.

Of course, these are just paper hedges... if you want a physical hedge, you can also buy the commodity outright for more security.
 
pa33 said:
Does anyone know the best way to put money into commodities as Jim Rogers recommends?
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Commodities will be a good investment... Later.

During the meantime... Extinguish debt.

And sprinkle gold dust.
 
lodge939 said:
Foreign oil companies are cheap right now
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I would go for a lot of other commodities before I would go near oil. Assuming this collapse is worse in the US than in other countries, and seeing as how this country almost exclusively drives the oil market, I'd be more inclined to go with commodities that will have global, broad-based appeal: grains, fibers, precious metals, etc.
 
I recently read Roger's book, Hot Commodities, and got a bit confused as he explained that, when buying commodities, one is actually buying a future delivery of that commodity. I got the impression that one would need to be careful in purchasing as the commodity actually has a physical delivery date. Like I said, Im confused.:confused:
 
luke-gr said:
I recently read Roger's book, Hot Commodities, and got a bit confused as he explained that, when buying commodities, one is actually buying a future delivery of that commodity. I got the impression that one would need to be careful in purchasing as the commodity actually has a physical delivery date. Like I said, Im confused.:confused:
Click to expand...

someone with greater knowledge correct me if i'm wrong:

when you're trading in commodities, you're not actual buying or selling bushels of corn; rather you're buying contracts for furture production of bushels of corn. the physical delivery date is when that contract is fulfilled i.e. when the corn is sold to market. you never acutally recieve the corn, just the return from the sale.

at least that's how i get it. anyone else?
 
ghengis86 said:
someone with greater knowledge correct me if i'm wrong:

when you're trading in commodities, you're not actual buying or selling bushels of corn; rather you're buying contracts for furture production of bushels of corn. the physical delivery date is when that contract is fulfilled i.e. when the corn is sold to market. you never acutally recieve the corn, just the return from the sale.

at least that's how i get it. anyone else?
Click to expand...

If you were to buy futures contracts (which usually involves thousands of dollars in required capital) for commodities such as corn, then this is correct. A futures contract is exactly what the name implies - the expiration dates are delivery dates for when the commodity will be sold to the market. This is helpful for farmers, for example: if a farmer believed that the price of corn were to fall before his harvest in the fall, he could sell his corn in advance to the market - this limits his risk and locks in the current market price for his expected harvest. As an investor, you are on the other side of the transaction, buying that corn with the expectation that the price will rise. (You can choose to take delivery of the commodity, but most investors sell their contracts back to the market)

However, what most people here are saying is to buy an exchange-traded fund (ETF) in the commodity that you want to invest in. An ETF is a managed fund which trades only in one particular area, and thus moves up or down with the market price (in the case of a commodity), just as a mutual fund would. Buying an ETF doesn't have the hassle of expiration/delivery dates and also requires much less capital and much less risk.
 
OK, so I was right and the commodity has to be sold back on the market before delivery date....unless I want to build a silo. :D

I somewhat understand the ETF idea. I'll do some research.....
 
luke-gr said:
OK, so I was right and the commodity has to be sold back on the market before delivery date....unless I want to build a silo. :D

I somewhat understand the ETF idea. I'll do some research.....
Click to expand...

The advantage of doing it through ETFs, rather than directly with futures contracts, is that the people managing the ETF will make sure that they dont take delivery.
 
IChooseLiberty said:
I highly doubt the OP has the $5,000,000 required as an initial investment into that fund.

Try PCRDX for the average joe version of this fund. $5,000 min initial investment.
Click to expand...

I got into PCRIX with $5,000 through TD Ameritrade. Not sure if they still offer it.
 
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