How To Trade Commodities?

Posted on March 10, 2010
Filed Under Commodities Trading | Leave a Comment

Read this 49 page Quantum Swing Trading FREE Report! Meet the High Velocity Market Master and get your FREE COPIES of the Ultimate Day Trading System and the Risk & Money Management Tool! Turn $200 into $100K in just 3 months with this Penny Stock Trading FREE Report! Commodities as an asset class are quickly becoming popular! It is being said that the 21st century belongs to commodity trading. Just remember the early part of 2008, when crude oil prices skyrocketed from $60 per barrel to around $150 per barrel. Wheat, copper, silver, aluminum prices all hit a high during the same time. It seemed that commodity prices are going to hit an all time high.

This boom in the commodity prices is going to continue for many decades. Commodity trading is going to make many investors and traders rich in first half of the 21st century. Fundamentals for commodity market are strong. With Brazil, Russia, China and India (BRIC) developing at a fast pace and other countries joining the rank of the emerging economies, demand for commodities will be a all time high for many decades.

You don’t have to just invest in crude oil futures or gold futures to benefit from this boom in the commodities. You can invest in ETFs, buy precious metals ownership certificates, invest in Master Limited Partnerships or invest in companies that process commodities such as uranium. Commodities markets are global in natures and so are the investment opportunities.

Master Limited Partnerships (MLPs) that invest in energy infrastructure like pipelines and storage facilities are a unique investment as they are traded publicly like a corporation but they offer the benefits of a partnership. Unlike Corporation that are taxed two times, MLPs are not taxed and they pass on their income to shareholders tax free. You will be only taxed on individual basis if you invest in an MLP. An MLP’s primary responsibility is to pass on all the cash flow directly to shareholders, you can afford not to invest in MLPs.

With the rise in the crude oil prices, the demand for nuclear power is on the rise. Price of uranium has gone from $10 in 1994 to more than $40. Uranium market is in an extended bull market for the last decade. You can profit from investing in companies that mine uranium ore.

As more and more investors and traders flock towards commodity trading, exchanges that provide futures contracts, options and other derivatives to commodity traders have seen their stock prices rise! The Chicago Mercantile Exchange (CME), one of the largest commodity exchanges has seen its stock price rise from $40 in 2003 IPO to almost $500 in 2006. This performance was even better than GOOGLE. With the global economy out of recession, this price is again going to shoot up. This is the best time to start commodity trading!

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