How To Invest In Commodities?

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Commodities have always be considered to be inferior as an investment. But in the last few decades, the world of commodity trading has seen many people getting rich. Commodity trading is no longer consider to be an inferior asset class. Rather, commodity investing is becoming popular. Commodities prices have been skyrocketing with commodities like gold, silver, oil, wheat,cotton and others hitting the all time historical highs in the last decade. Gold just breached the historical barrier of $1200 per troy ounce in the last few months of 2009. Crude oil prices jumped from around $60-70 in the summer of 2008 to more than $140 per barrel in a matter of few months. It is being said that the 21st century belongs to Commodity Trading!

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.

Now, as said before commodity investing is going to make many people rich in 21st century. At least, commodities has made the exchanges that provide the futures contracts, the options contracts and other derivative contracts based on commodities rich. The shares of Chicago Mercantile Exchange (CME) has gone up from around $40 per share to close to $500 per share in 2006 beating even the GOOGLE. These prices are going to go even more high in this decade. CME is one the largest commodity exchanges in the world. Other
popular commodity exchanges are NYMEX, CBOT and LME.

About the Author:

Mr.Ahmad Hassam has done Masters from Harvard. Get this FREE Ultimate Swing Trading Software that works for forex,stocks and futures: http://www.ninjatraderblog.com/trading/2009/10/swing- trading-can-be-a-better-option-than-day-trading. Get these 3 FREE Investing Report and discover a Stock Trading Course that can make you rich in 2010: http://wp.me/pDUbF-Fu

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I agree, commodity investments are not what they used to be.