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Commodity Investment: Here's How One Can Maximise Profit By Investing In Crude Oil, Gold, Metals

Making An Investment In Physical Crude Oil May Not Be As Easy As Other Commodities. For Example, Purchasing A Barrel Of Oil May Not Be The Correct Way To Invest In Crude Oil Market.

News Nation Bureau | Edited By : Mohit Pandey | Updated on: 20 Feb 2020, 06:50:43 PM
Commodity Investment

The gold market is one of the most exciting and profit-oriented sectors for investment. (Photo Credit: Representative Image/PTI)

New Delhi:

A good investor is one who knows the fact that ‘one can't put all all eggs in a single basket’. It basically means that ‘diversifying investment’ is the key to be a savvy investor. The horizon for investment is wide-open and an investor has to be smart enough to decide which of the sectors can be fruitful from investment point of view. There are plenty of options to choose for investment including- stocks, bonds, mutual funds, futures, and currencies.

There is also the option of commodity investment. The major benefit in commodity investment is the ‘protection’ against inflation.  Whenever the demand for any commodity goes up during the time of high inflation, the price also follows a northward trend. Crude oil, gold, and metals appear most viable of options for commodity investment.

Crude Oil—

Making an investment in physical crude oil may not be as easy as other commodities. For example, purchasing a barrel of oil may not be the correct way to invest in crude oil market.

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The future prospects of investment has to be taken care of and in order to do that, one can consider purchasing stocks in oil companies, crude oil mutual funds, or even ETFs.

Other options which can be explored in crude oil investment include buying shares in mutual funds or energy sector ETFs, which invest directly in oil company stocks. If one explores these routes to invest in crude oil, the risk of loss goes down.

Gold—

The gold market is one of the most exciting and profit-oriented sectors for investment. This precious metal is used as a hedge against inflation.

The investment in gold is different from that of crude oil. One can get the physical possession of gold by purchasing gold bullion bars or coins. 

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Like crude oil, one can also aim for future contract to invest in the yellow metal. The investors are initially required to deposit an initial margin. However, the risk factor keep looming over for example, if the price rises, investors will profit and if it goes down, investors may suffer loss as well.

Base Metals—

Inexpensive metal like Aluminum, zinc, and copper can also be opted for making investment. This sector appears exciting for investment as there is huge applications of base metals world-wide and global demand is also high—particularly from nations like China and India.

These factors tend to lure investors. Investors can purchase stocks in base metals companies to make the most out of this sector.

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First Published : 20 Feb 2020, 06:48:39 PM