Market Overview

Investing in Oil, Silver and Gold Trading Commodities to Attract High Returns

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Trading in commodities is getting very popular nowadays. Investors today are now turning to various merchandises to attract high returns on their investment in the future and companies such as Dow Jones and Nasdaq 100 are attracting hungry investors every day. Since oil, silver and gold are trading commodities that are constant newsworthy items; many investors are getting in on the action in one or all three properties.

A leading company known as Prime Trade, which specializes in trading commodities such as oil, silver and gold, is making sure that investors are kept informed at all times of changes taking place in the market. Their 1 2 3 steps program are ideal for beginner traders and experienced investors can learn from them as well. Interested persons that are looking to make a profit in the commodities market can visit them at www.primetrade.com to learn the art of successful trading.  

Oil

Oil is a big trading commodity worldwide and today some countries depend on sale from it to keep their economy running. Countries such as United States, Saudi Arabia, Venezuela, Canada, Iran, Iraq, Kuwait, Russia, United Arab Emirates, Libya, China, Mexico and Nigeria are some of the world’s richest oil nations. Recently, the Bank of America Corp reported that the United States has overtaken Saudi Arabia and Russia, (which has the two largest oil reserves), thus, becoming the world’s biggest oil producers.

Today, the United States alone is pumping over 11 million barrels a day, thus making them the largest producers in oil and natural gas liquids. Since 2014, oil sales have begun to boom both in Texas and North Dakota.

The Energy Information Administration (EIA) reports in 2012 that the Organization of the Petroleum Exporting Countries (OPEC) (excluding Iran) has reported $982 billion net reserves in profit and is showing an increase of 5% from as far back as 2011. In 2013, according to EIA and other experts in the oil industry, profits are expected to reach a record high of $903 billion before the close of 2014.

Global oil production is on the increase and since the last four years, there have been an output of up to 557,000 barrels per day. In 2013 alone, the public utilized 33% of energy oil consumption. So far, the United States and China were responsible for 56% of the oil demanded by the public in 2013.

A sensible way to invest in oil is to buy exchange trading-funds. Though these trading funds are sold worldwide, a popular place to buy them is at USO, the United States Oil ETF.

Silver

Precious metals are favorite commodities that investors often turn to when it comes to making a profit. In the past, silver was considered a store of wealth and a form of value, thus making people prize it as money. However, over a period the value of silver fell and today most, if not all, developing countries refuse to use it as a legal tender. However, today Utah still allows its citizens to use silver as money. In 2011, the amount of silver reserves equal to that of 530,000 tons.

In 2009, the production of silver was mainly used for jewelries, exchange traded products and bullion coins. Today, the public can still use silver to purchase the American Silver Eagle and Canadian Silver Maple Leaf coins, which they looked at as reasonable investment opportunities.

As a commodity, the public often speculates on the value of silver by means of demand and supply trend, which can either send its price rocketing upwards or falling. Due to a low market liquidity, silver is in less demand than gold is.

However, since 2005, silver’s price has been on the increase moving from $7 to $14 per troy ounce. In March 2008, the price of silver rose to $20 per troy ounce. However, in October of the same year, the price went down drastically by 58% because of credit crunch effects affecting banks and other financial houses. April 2011, the price of silver again rose and started selling at a high of $49.21 per troy ounce. This sharp increase came about as a result of inflation and other economic concerns like what was happening in the Eurozone in regards to bailouts that made the public become uncertain about other trading commodities.

In the past years, investors such as the Hunt brothers, Warren Buffet and Morgan Stanley invested in the silver and in some cases even influenced the price of the commodity to increase. Today, some investors are using silver as a valuable commodity to hedge against future devaluation, inflation and deflation.

Investments in commodities such as silver coins and bullion bars are on the increase. In addition, since silver exchange-traded products like exchange-traded funds, exchange-traded notes and closed-end funds are proving to be valuable ways for investors to invest without the hassle of packing away physical bars.

Gold

In comparison to silver, gold is a much more sought after commodity because of its weightier value in cash. Investors have the option to invest in mutual funds, gold mining stocks or in just the plain metal itself. Unlike the dollar that sometimes falls in value, gold will increase in value, thus giving investors high returns on their investment.

Investors investing in gold have many choices available to them to choose from and some of the main choices that investors have are:  

·       1.  Direct ownership: Past civilizations have recognized the value of owning gold in its physical form. In the past and today, the value of gold is escalating and thus the public recognizes it as the only commodity that cannot lose value. Since the value of gold can only appreciate, no government in the world can easily control it and thus investors investing in this valuable commodity can rest assured that they will get high returns on their investment. As long as demand and supply remain, the price of gold will go up. The best ways to ensure high returns on any gold investment is for the investor to purchase minted coins like one ounce South African Krugerrands, American Eagles and Canadian Maple Leafs.    

·        2. Gold exchange-traded funds: Recently, there have been an increase in the value of exchange-traded funds being traded on the stock exchange and this increase gives way to a boost in the value of gold. In the United States, the two exchange-traded funds that investors are trading in contain gold bullion as their asset.

·       3.  Gold mutual funds: Not everyone wants to invest in the physical gold bars and so gold mutual funds have been created to assist such persons. Mining companies that sell shares on the stock exchange have a portfolio of gold stocks. For example, Newmont Mining Company offers to the public senior gold stocks for sale mainly because of the company’s profitable record of accomplishment. Since Newmont produces a certain amount of gold each year, investors tend to buy gold mutual funds from them rather from new companies they do not trust just coming on the scene.  

·       4.  Junior gold stocks: Although junior gold stocks carry a greater risk, investors will still buy them nevertheless. However, if they perform well, investors can expect to get high returns, even in a short period after buying them.

·        5. Gold options and futures: Gold options and futures allow the more serious investors to speculate in the price of gold on the market. When an investor buys a call, he or she is expecting prices to rise and when he or she buys a put, prices are expected to decline. Therefore, anyone who enters into the options market must have wisdom and experience if they are to make money on their investment. Since the risk of losing are so high in the options market, an investor is allowed to buy large amounts of gold with limited money.

While demand and supply still plays a part in the price of oil, silver and gold, investors can watch the market to see if the value of these commodities will rise or fall. Still, all three commodities are considered at this time to be very valuable and once owned the buyer can expect to make some high returns in interest rates in the future.               

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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