How To Invest In Commodities and Why?
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- čas přidán 25. 06. 2024
- As the conflict between Russia and Ukraine has intensified so has an interest in investing in certain commodities such as wheat and oil. In this video, I look at why you may want to consider investing in commodities, what drives them, how you can get exposure to them and what to look out for when choosing commodity funds.
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Timestamps
00:00 Introduction
00:46 Types of Commodities
01:43 Volatility
02:52 Correlations & Diversification
04:40 Drivers
08:34 Commodity Indices
09:40 Futures or Physical?
11:13 Roll Optimization
13:36 U.K. Funds
17:32 U.S. Funds
20:16 Conclusion
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This is great. Simple but yet very informative. Continue the great work.
Much appreciated!
You've got to be much braver than me to look at commodities funds that have just shot up 40-50% and think now's the time to buy
Agreed. I'm just waiting for signs of things settling down and doing some due diligence to figure out how supply & demand might look in the years after that. Mainly to see if there's a case to open any short positions.
Agree. Well done all those who bought in a month ago, but I just can't justify jumping in at these levels.
@@chrisf1600 Massive respect to those that called the commodities pop a month ago. ATM the only things I'm brave enough to buy are UK dividend stocks with strong balance sheets and single digit PE ratio's. Only time will tell if that's wise or foolish.
I hear you Mr Green but what are the alternatives?
this was really practical and helpful. thanks!
You're welcome!
Excellent overview. Thank you for this
Glad it was helpful!
Great Information looking forward for more 👍🏽
Thanks Marlon! Ramin.
Again Ramin,enjoying a lot your explanations
Very useful. Learning some much from your videos. I am very thankful to you.
Glad to hear that
Thanks you made me an extra fortune.
Thank you!!! Informative as always.
Thank you @Vivien Le Geisha! Ramin.
Did I hear that right… livestock: “Things such as pork bellies”
Just like in the movie ‘Trading Places’ that discussed Pork Belly Futures 😂
@@BarryKa1970 Today I learned :)
HOGS
Lean Hogs, Live Cattle, Pork Bellies... These are all standardised commodity products. Futures markets for the are huge.
Wheat (different types), coffee, corn, rapeseed or canola, cocoa even.
Not to mention all the oil types as well as gasoline.
Have a look at the Chicago futures markets and you'll see the commodities trade of the Western world in stark contrast.
govt body takes that data seriously
Thanks Ramin - super interesting 🙂
Glad you enjoyed it
Perhaps worth mentioning that although commodities have given very good returns during some periods in history, over the long term (multiple decades) the expected return is flat or even negative. Unlike the stock market, there is no persistent risk premium and you're not rewarded for buy-and-hold. You're basically buying an asset in the hope of flipping it to someone else later.
True @Chris F I've talked about that before in this video "Should You Buy Gold" czcams.com/video/Z3F4DJWquL0/video.html Commodities just keep roughly in line with inflation. Thanks, Ramin.
Commodities is one asset class where you do need to (try to) time the market a bit IMO; it's been a great hedge against the inflation ramp up over the last 6 months - 10% allocation helped limit the damage to my portfolio as many equities and bonds got beaten down at the same time (which is a bit unusual to be fair).
Sounds a bit like cryptocurrencies. The original intent of Bitcoin was to use it as an alternative medium of exchange, however in practice it's being used for speculation. I don't know anyone, other than celebrity-types, who have used a cryptocurrency to purchase a good or service, but I know several people who trade cryptos for speculative purposes. One advantage to commodities is that they represent real physical assets and most commodities fluctuate within a supply/demand cycle. If you're willing to monitor those cycles, then you can trade them successfully. Also, not all commodity classes move in tandem, so there is usually always a commodity class that is tradable at any given time.
Fabulous video.
Thank you very much 👍👍👍🥳🥰
Thanks for visiting
thank you so much and relly need those.😊😊
Most welcome 😊
Thanks so much for such a great video.
You are so welcome! @jepp.6847
This video helps a lot for beginner like me. Thanks.
Glad it was helpful @Tsung-Hsiun Li
Disappointed you didn't mention commodity super-cycles at all, i.e. the cycle between rising commodity-prices causing new sources (e.g. mines) being invested in, which in turn increases supply and brings down prices again on a multi-year cycle.
This subverts the buy-and-hold strategy of investing and is an important factor understanding commodity prices (possibly with the exception of precious metals since they are more speculative).
....Hi love your videos, very helpful...remember i saw one in which you discussed a agriculture ETF you bought, but cant find it, could you tell me which vid ( and time stamp, if possible) big thanks sophia
I like this vid.. Good insight.
Thanks
Thank you.
You're welcome! @kyekyllean9221
Great video!!
Glad you enjoyed it
Excellent! 👍🏻
Thank you! Cheers! @juwright1949
Good timing
Thanks
💥💥 Very clear comments💥💥thanks💥
You're welcome @Henry Terranauta
its too late to invest in commodities I expect most of the rally has already happened
Getting direct exposure maybe. But many signs point to a super cycle industrial metals (lithium, copper, graphite etc) and there are in my view a lot of undervalued juniors and near term producers. Of course, pick wisely.
Look at canadian oil companies still prices with price/earining below 4. Bonterra, Baytex, whitecap etc.
@@davidlewis5737 they've all had massive inflows over the last 18 months. They may well play out but they are a 2-5 year play surely?
@@thesolitaryadventurer I do agree that many segments have run hot- particularly lithium. But I don't see that so much in copper. I also think multi-year elevated prices of lithium has not been fully appreciated; some are calling a bubble burst and I think they are making erroneous comparisons with the past .
Wonderfully informative and insightful presentation! Thanks, in this time of trial.
I am glad it was helpful @Jay DeLuca
Excellent video 🎉🎉🎉
Thank you 🤗 @apricotcomputers3943
This is one guy you would trust with your portfolio
Thanks
Good video. I have found the fund UC15 to be useful.
Glad it was helpful!
Do you have a views on the merits of moving a large 100% growth stock pension, near retirement, to dividend etfs ?
great video
Thanks for the visit
I think it could be another good year for commodities during the current political climate. I have just invested 10% of my portfolio. 😄
Is it not a good idea to GBP hedge Gold, if dollar weakness typically makes gold rise? Enhance the returns.
I'm invested in Uranium, Oil and industrial metals. The gains are incredible honestly
URNM took a hit on news last week. Stopped me out. Always risky. ☢️
That was a great information, thanks ! I have some vanguard investments and as far as I know Vanguard UK doesn't have any commodities and is quite limited. Would someone suggest, where to find one of this nice funds with not so much fees? thanks for this great information!
Glad it was helpful!
I also invested in vanguard but i also need more smart and genuine way to invest, any idea?
@@geofreyumanger6542follow the steps and guideline of Christine Lynn Saitta, she have been behind secret of my success, look her up online
It's fascinating to hear that someone here employs madam Christine's services. She has been managing my investment
A CNBC news host spoke so highly of💕Christine Lynn Saitta and her loss prevention strategies been trying to get to her
You don't want the barrel of oil in your fancy office? Haha! Nice video :)
thanks
Do you have any videos on high yield bonds? My 401k is in Blackrock high yield bond
what's the best just broad market commodity etf in the US?
Gold and Silver perform really well during the big Stagflation we are heading to in the 3rd quarter of this year .
@@george6977 from a Romanian gypsy lady .
@@ahmedalsharman good luck with that.
I am considering commodities as an alternative investment though it would be a CEF instead of an ETF product.
How is the best way to buy into Coffee as a commodity ?
Isn’t this a bit late? Thank you for last year’s video on the commodity super cycle!
Can I ask why you would buy the cheaper funds?
Ramin, can you make a similar video about the Carbon Credits markets. After a rough decade they're now on the rise.
have you checked out the CARP ETF ? It's had a rollercoaster ride recently, some think it's due to forced selling by Russian holders. V interesting market.
Investing in commodities has been a great investment for a few years now. Lower supply and higher demand and higher inflation equals higher commodity prices
Definitely; I've had 10% of my investments in commodities (UBS ETF Bloomberg Commodity SF EUR A acc (DCEUAS.SW)) and it's helped reduce the damage over the last 6 months vs. what the broader market has suffered. The quandary now is whether to maintain the position or start to trim it down - I would reduce it somewhat if I thought inflation had started to moderate 🤔
@@firsargentum5920 in my opinion we are entering a new inflationary cycle where commodities and energy will be the best place for capital
@@lancobear8894 Yeah, I'm thinking you're right. I've had a stake in BP for several years also which has buoyed me up over the last 6 months - think I'll hold onto both given the way things are going. There is a dismal lack of investment in new oil exploration which will be necessary as the transition to renewable can't happen overnight IMO...
That was very useful, getting into investing for the first time. With current inflation would it be wise to invest into commodities until the inflation starts to go down?
How do you even begin to invest with $100 $500 $1000 🤷♂️
@@devonwallace2 The most conservative method would be to invest in Exchange Traded Funds (ETFs) as he mentions in this video. Most brokers will allow you to purchase partial shares if you have a small brokerage account.
Great video......so with buying ETF's does the price go up and down daily? and who is the cheapest to buy through in Europe?
ETFs price like a share. That is, they price constantly throughout the trading hours of the exchange.
Cheapest to buy? Varies a lot on what you want and how much. Google to find brokers - if you have an investment account already, they probably allow trading of ETFs.
Coal and uranium??
is it too late to invest in commodities now?
Missed the boat? (I've been invested in nothing else, except gold and silver, for 6 months). Despite all time highs guess there's a lot more to come yet .
How do i make a profit off of gold and silver?
5:45 I suggest looking at the behaviour of gold prices during 1978-1980, when we had 15% inflation, and thereafter equally high interest rates when Volker did his thing.
In short, gold more than tripled.
This was also when Bretton Woods ended and that probably had a lot to do with the incredible rally in gold at that time. That's why I think the backtests which show that gold is a great inflation hedge are swayed by this one-off event and may be misleading. Gold's only useful as a hedge against hyperinflation which we're extremely unlikely to witness in developed markets. Thanks, Ramin.
@@Pensioncraft Appreciate the response. Will investigate.
@@Pensioncraft what chance do you think that the fallout from Ukraine leads to Russia flexing their energy might and forcing sale of their oil in either rubles or even physical gold? It'd revalue their massive gold stock and have the west dance to their tune.
(This is a Luke Gromen extreme case hypothesis - credit to his great analysis)
I am invested in wisdometree crude oil it whas going up i am down 25% price is 17 i just dont understand the drop why is it when oil is still going up?
;;;;
You forgot uranium.
At the moment dollar is strong and gold price is high. Right? In the video it`s not explained that way.... Can you explain why?
Not all those factors are related to the gold pricing at the same time. One factor can cause the change in the gold pricing.
@@bercaio ok. which factor?? Fear??? Because dollar weakness and low interest rates are not
@@IvanIvanov-kn5oz Fear, and the expectations of imminent interest rate hikes. Which is supposed to make dollar even stronger.
How to invest in commodities, step 1) buy before the supercycle. step 2) sell the rip.
If you've rolled up your sleeve for the you-know-what, forget about long term investing and just enjoy what you have now.
A day late and a dollar short
Gold is the only real money. Gold measures dollars and everything else rather than the other way around.
Can you evidence this theory with a link?
@@thesolitaryadventurer Really, a link would convince you? Isn't it self evident? Here are some questions for you:
1. Why do governments and central banks buy gold if gold is such a has-been asset?
2. How much of its purchasing power has the dollar lost since 1930? Since 2000?
3. Do you believe that fiat money can ultimately retain any value? There are many links available regarding all three of these topics.
Who else is here to try to profit from war?
This advice was once sound , if one needs a pension and intend to look long term there’s only one investment to make that’s all in on Tesla there is no models that can deny the massive returns that will come, Tesla is heading to multi trillion $ growth , even with average IQ and in-depth study of the rise of Tesla its clear where it’s heading, you can throw all the potential macro environments that the future might hit but it’s cash base will out ride them all, my brother has a portfolio run buy a manager and it’s been bobbing alone ok, against this managers advice he went big on Tesla before the split he’s now sitting on huge growth never seen before, this will quadruple in the coming few years, Tesla’s competition is still not close rest my case
Are you even serious? Investing all your money to one company?
What a load of hot air.
What’s the point of Ramin going on about sensible investments , risk spread, diversity, drip feeding ect if your just going to ignore all the good advice and bet on a single company for the only reason that you’ve seen it go up in the past and have extrapolated that growth into the future for no reason.
Oops, sounds like someone bought TSLA at the peak and is now desperately trying to claw back the 30% before his wife kicks him out of the house. Look up "uncompensated risk", you're taking a massive gamble.