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How to invest in commodities

By Edited Sep 19, 2016 0 0

Decide which type of commodity to invest in. Gold, silver, coffee, beans, alcohol and gas are all examples of popular commodities. Gold tends to be a safe haven for investors, while other commodities are good for short-term profit taking. The market should determine what type of commodity you invest in and how that effects your overall strategy.

Buy low and sell high. The most basic rule of investing is buy low and sell high. This means, you should wait for certain commodities to hit a bottom where you can buy a high quantity to later sell. You may have to wait for a while, but commodities like gold are sure to eventually go back up.

Determine the cost indicators and how to act on them. Cost indicators can be anything. An example of a cost indicator is when a currency goes up, this will usually result in gold decreasing in value. Sense gold is an obvious safe haven that will always be there, you can wait for cost indicators to give you a oppurtunity to buy.

Be patient. One understated key to investing success is patience. You will have many chances to take the early profit when you know the price of your commodity will only go up more. This is where patience comes in. You will need the patience to wait for the right buying and selling opportunities. If you notice a commodity decrease in value, be patient, it could go down a lot more before it hits the bottom.

Decide if you are short-term or long-term. Long term commodity investing often involves you waiting for a bottom in the commodity markets to invest. Short-term investing is different, you will need to learn how an oil spill affects gas prices and capitalize on this information.

Watch the news and learn how it affects the price of commodities. The price of commodities are affected by worrying investors. When an oil spill occurs, the population immediately reacts accordingly. By studying the news, you can watch the stock market to learn how various commodities are affected and act accordingly in the future. So in the future, when you see the same story, you will know to buy that commodity. You will also have a time line worked out for when you need to sell the commodity.

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