What type of commodity investment a person should make? it's of course impossible to answer that question without knowing a lot about the risk factor willing to be born by the investor, the specific goal of their investing, the time horizon they're willing to endure, and how much they know about the sector they're looking at.
If someone is using a commodity broker to do their trades and make decisions on their behalf, it's still necessary, in my opinion, for an investor to at least have a general knowledge of the sector they're being guided toward.
I wouldn't think of investing in commodities if I wasn't looking at the long term, as in the short term they're one of the more volatile investment sectors to engage in. Try to do the market timing thing and you'll get slaughtered. None of the great commodity investors get into that, unless they're just playing with some spare change they don't care if they lose or not.
This happens because speculators gamble in the market and push prices to huge swings over the short term, as well as some market forces do the same thing as prices respond to unforeseen events. But the great thing about commodities is they're based on supply and demand over the long term, and that supply and demand is not terribly difficult to foresee, especially demand.
Supply is the more volatile factor because so many things can happen producers have no control over; like diseases destroying crops, water problems, and even electrical grid problems in countries like South Africa, where mining operations have to be cut back because of lack of electricity.
Anyway, the type of commodity investment you make must be one you know something about the demand for, or you could invest in an index that tracks a certain sector like agricultural commodities, which are sure to go up over the next decade or two. That's safer than trying to run one individual commodity, unless you really have a solid grasp of the factors involved in the supply and demand equation.
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