With the possibility of inflation on the rise, the price of gold is steadily increasing. Will it hit $1,000 an ounce or will it top off and shoot to the downside? No matter what you answer is, there is an ETF (Exchange Trade Fund) that will allow you to buy into the upward or downward move.
Why Commodities?
When uncertainty comes into the stock markets, many investors/traders turn to commodities like gold, oil, or other commodities that are likely to rise. Why trade commodities? In an uncertain market, people still use commodities, some more than others. When there is a threat of inflation or the dollar starts loosing its value, watch the price of gold, which is almost certain to go up.
Be forewarned, commodities can move VERY FAST both to the up side and down. Some of investments below are leveraged products that can significantly increase your profits but at the same time, they can increase your losses too. I always like to recommend stop orders. With leveraged positions, it should not be optional to place stop orders. PLACE THEM!!!
Commodity ETFs
Want an ETF that gives you a diversified portfolio of commodities? iShares S&P GSCI Commodity Indexed Trust (GSG) is composed of 67% energy, 16% agriculture, 7% industrial metals, 7% livestock, and 3% precious metals. A less diversified way to play commodities through ETFs is the PowerShares Commodities Index (DBC) which investing corn, gold, heating oil, aluminum, wheat, and crude oil.
You can also invest in individual commodities.
Leveraged Commodities
ProShares offers the following leveraged (2X) long ETFs:
ProShares also offers the following leveraged (2X) short ETFs:
- Ultra Short Commodities (CMD)
- Ultra Short Crude (SCO)
- Ultra Short Gold (GLL)
- Ultra Short Silver (ZSL)
Whether you are looking to trade commodities for the short term or as a permanent part of your portfolio commodities ETFs are great investments that can offer great returns. When using the leveraged ETFs, place stops and trade them; they are not investments.
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