Question:
I was somewhat interested in trading commodities. I went ahead and opened an account, but I don’t really know in which commodity is worth looking at. What do you suggest?
Robert
Answer:
Robert, “somewhat interested” is a phrase that does not bode well for trading your hard-earned dollars. In my opinion, if you are going to go down this path, do it with commitment and with full interest in what you are doing.
As to the commodity “worth looking at” … Well, my friend, you have choices, and lots of them, but let’s deal with the 800 pound gorilla first—gold. Should you begin trading this commodity? For me, the gold trade is too crowded and surely headed for a “pop.” More than few analysts, though, say gold is headed for $1300, $1500, or even $5000 per ounce. This may or may not happen, but for the moment, gold is the commodity trade.
Corn, natural gas, copper, and oil are four commodity trades that you should consider. Ethanol will make a comeback in our conversion to “green” energy. Natural gas will pick up steam as an alternative to oil. Copper is the metal with solid fundamentals. As the global economy emerges from this deep recession, copper will play well. And oil? Well, no matter what this commodity is doing now, as the economic recovery picks up steam, so will the price of oil.
As an alternative to selecting one or two commodities to trade, consider trading a commodity index. Doing this spreads your exposure to all the commodities, which makes trading easier, and it gives you a higher probability of success as you start out. Consider the ones below.
VALUE CHANGE OPEN HIGH LOW
|
UBS BLOOMBERG CMCI |
1266.77 |
-7.98 |
1276.58 |
1282.57 |
1266.37 |
|
S&P GSCI |
490.84 |
-5.10 |
500.54 |
502.20 |
490.45 |
|
RJ/CRB Commodity |
271.16 |
-.74 |
272.86 |
273.38 |
271.16 |
|
Rogers Intl |
3125.67 |
-30.79 |
3150.23 |
3175.21 |
3125.07 |
Trade in the day; invest in your life …
