What do you have to do and how do you invest in commodities?

Question

Is there a place on line or any good books or publications that explain the in's and out's of commodity trading?

Answer 1

One does not invest in commodities. One speculates in commodities. The margin requirements are considerably less than in stocks so you have a lot of leverage. That of course and work two ways. Amatures like you and I do not do too well in general because we are betting against the professionals such as ADM for example. They know a whole lot more about commodities than you and I do. Sometimes if you are lucking or smart you can make a bet on the right side of the trade and make a lot of money. I had a friend once who make over $25,000 on soy beans back in the 70s. He had a farmer friend who told him that soybeans were going to take off because of the deal Nixon made with the Russians. I managed to drop $4000 later on a supposedly safe soybean spread. Ha ha. I learned my lesson. Kind of an expensive lesson but well learned.

There is a trick that you do need to know if you think you might want to speculate thussly. Your margin requirement can be t-bills. That way you earn 5% while you are loosing your shirt.

Answer 2

Too risky to think reading is going to be of any help. I'd stick with etfs that have pros do it for you. dBA-agricultural futures DGL-gold. DBV-currencies. All trade like stocks. Not an area to just do it yourself.