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commodity?

Gary Giardina


If you’re looking to get into commodities trading, you should first understand what it means. Commodities are products that are bought, sold and usually not processed. Some examples of commodities are financial investments and agricultural products. Foreign currencies are also in that group.

A lot of products that used to trade locally have now expanded into the global market. Thanks to technology, more money can be made by the global expansion. Many countries, including the United States, have become one big melting pot for global trading.

When commodities first evolved, not a lot of people were using them. When people found out that it was better to take a risk on this as opposed to stocks and bonds, more people jumped on board. Now anyone can get involved in commodities trading.

When you’re involved in a commodity transaction, it is set up through futures contracts. Futures contracts are purchased and/or sold on the date specified for the future. A price is put in place and the transaction is completed at a later time.

There are also contracts called spot contracts. These are contracts that are used for transferred commodities. They get shifted when a contract is created then instead of a future date. This type of contract can be used for a future contract after a specific time period. The type of commodities investing can vary.

When you invest in commodities, you don’t have to endure a lot of risks. That’s why people like to invest in them. When you get an increase in commodities, it can offset any losses you may have. The risks in commodities are minimal because you’re investing in different things. When you have contracts for later dates, you don’t encounter a lot of risks.

There is not a problem when you’re watching how your commodities work out. Even when stocks and other stuff aren’t going so good, you can at least count on your commodities to hang tough. Unlike stocks, you can tell how well commodities are going to do. You should never compare stocks and bond with commodities because they are two different entities. Plus, stocks and bonds are more volatile because of their uncertainty in the daily market.

If you’re not familiar with investing in commodities, you should find someone who is knowledgeable in it. Commodity trading advisors can assist you on what to do in the market. They will also let you know when it’s time to get rid of that commodity.

When choosing an advisor, look at what you what to accomplish. After you’ve done that, find someone who would be able to help you with your goals. You don’t necessarily have to go to a brick and mortar facility. Since people are so busy these days, it might be better if you contact them by phone or e-mail first. Then you can set up a time to meet, if necessary.

You can do other things besides trading in commodities. You can also make investments using a diverse package of funds.

With commodities, you are less likely to lose money than you would if you were strictly investing in stocks and bonds. That’s why it’s important to diversify your money if you’re planning on creating a nice financial portfolio.

BobCharts

http://www.SupportLineAlerts.com This is today’s BobChart for Embarq Corp..
Embarq Corp. closed at 40.36.
The nearest support is 2.1 percent below the close at 39.50.
The nearest resistance is 15.72 percent above the close at 46.70.

Caterina Christakos


The easiest answer for this question is: anyone who does not mind being in a riskier market. In fact, the commodities market is reputed to be so volatile that fortunes can be made or lost in a matter of minutes or hours, if you don’t know what you are doing. To get a better understanding of investing in the commodities market, let us take a look at some of the basics.

What is a commodity?

A commodity is anything that can be bought or sold. Examples of a commodity can include oil, gold, oranges and currency. When you invest in commodities, you are basically betting on what the market will do. You will bet that the price of oranges will rise or that the value of the dollar will fall.

Investment strategies in commodities

Most financial experts do not recommend investing anything in the commodities market that you can not afford to lose. It is not the investment type for someone who wishes for a safe investment for their retirement account, unless you put your money into a managed account.

However, if you do not mind higher risk in return for the greater chance of higher returns, commodities might be a good option. Commodities are a great way to use a portion of your portfolio in higher risk/higher return investment, but should never be used as a major segment of your portfolio.

Safe investing in commodities

If you really want to take your turn at commodities investment, but want to minimize your risk, take a look at commodities funds. Because these funds include a mixture of different commodities, the risk may be minimized by the very nature of the portfolio.

If it is riskier, why would anyone invest in commodities?

The return, when someone wins in the market, can be extremely high. There have been a number of millionaires made through commodities trading and will do so again in the future.

In addition, it has long been understood that the commodities market is a great hedge against inflation. When inflation unexpectedly hits, the commodities funds tend to do a lot better.

Finally, commodities are always in demand. Gold, oil and currency will always have a market because we need them. They will never become outdated and the demand will never disappear.

Investing in commodities may be the perfect investment for anyone who doesn’t mind using a small portion of their portfolio in higher risk activities in order to achieve a higher reward. If you do not have the time to follow markets and industries on a day to day or hour to hour basis, checking out the commodities funds are the next best thing.

sharesomebody


I am interested in investing in Commodities but I am not sure how or how much money an initial investment would be.
I have been trading stocks for a year now on sharebuilder but they do not have a section for Commodities / futures.

Any advise or tips would be appreciated.

newport229


I invest in commodity and financial futures and would like to know whether I need to pay quarterly estimates taxes based on appreciation in my account value at the end of each quarter. This investment can be quite volatile so a gain at the end of Quarter 1 may quickly disappear in Quarter 2. I don’t want to pay taxes that may be refunded eventually.

Thanks for any help!

Australasian Investment Review


China’s economy is now slowing significantly. The AMP’s Dr Shane Oliver says it has slowed significantly on the back of slowing exports and a domestic property slump. The share market is off 70%.  Growth is likely to slow to 8% in 2009, but a hard landing (say 5% growth) is unlikely.

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The Chinese economy is slowing

The evidence is now overwhelming that China’s economy has slowed significantly:

• Growth in real GDP has slowed from a peak of 12.6% over the year to the June quarter last year, to 9% over the year to the September quarter this year, its slowest pace in over five years;

• Industrial production has slowed from annual growth of around 18% a year ago to 11.4% last month;

• Auto sales fell 2.8% for the year to September, the first fall since early 2005;

• China’s average house prices have fallen about 4% from their peak in January and home sales are down 42% from a year ago;

• Money supply and loan growth are running well below year ago levels; and there are

• Numerous anecdotes of business failures amongst east coast exporters (for example, half of China’s toy exporters closed in the first seven months of this year);

The slowdown is primarily being driven by three factors:

• A slowdown in export volumes in response to the US and European slumps;

• A property slump which resulted from policy measures designed to slow the economy and property development that were put in place since 2004; and

• Production restrictions in the Beijing area associated with the Olympics and Paralympics have exaggerated the recent weakness in production.

Leading indicators suggest a further deceleration ahead - The OECD’s leading indicator for China suggests a slowdown in growth to around 8%.

This is likely to be led by a further slump in export growth to around 10% from 21% currently on the back of the global slump and a sharp rise in the trade weighted value of the Renminbi in recent months.

The impact of the property downturn will also feed through to business investment (where property construction accounts for about 25% of fixed asset investment) and consumer confidence.

But why not a hard landing?

While China is slowing significantly it’s unlikely to have a hard landing, which given China’s potential growth rate of around 8 to 10% and need to find jobs for roughly 10 million rural workers each year would mean growth of around 5%.

• The Chinese banking system looks solid compared to that in the developed world. Loan to valuation ratios have been falling, there are limited linkages to global banks, there is no dependence on foreign capital, there is no confidence crisis and credit availability has only been an issue to the extent that the Government has restricted it.

• The Chinese corporate sector is in good shape. Leverage has been falling and the level of retained earnings is high as is the return on equity. The equity market only accounts for 15% of corporate financing.

• Consumer spending is likely to remain robust. Despite the 70% slump in the Chinese share market and falling house prices, consumer spending has actually accelerated recently. See the next chart.

Chinese consumers have very high saving rates, are not very geared and only 5% of Chinese households have a significant share exposure.

On top of this the authorities have been trying to boost consumer spending via a range of policies including social security reforms, labour reforms and assistance for rural workers; these policies seem to be working.

Monetary conditions are now being eased aggressively with two interest rate cuts in less than two months.

This has been made possible by a sharp fall in inflation.

In fact, after years of plus 20% pa investment growth it’s likely that the slump in demand for China’s exports will see deflation become more of an issue as excess capacity starts to build up.

With China’s key lending rate at 6.93% there is plenty of scope for further easing and this is likely to occur soon.

• Fiscal easing is now on the agenda with the Government looking set to increase spending on infrastructure related to agriculture, energy, transport and urban development.

Increased social spending and increased subsidies for farmers are also likely.

There is a lot of room for fiscal stimulus in China as the budget surplus is running around 2% of GDP.

• Policies are also set to be introduced to specifically boost the property sector including increased public housing construction, reduced transaction taxes and support for home purchases.

Some cities are already moving to stimulate their local property markets.

• Finally, further increases in export tax rebates for exports such as textiles are also likely.

The Chinese Government has switched focus from worrying about inflation to trying to stabilise and maintain fast growth. While China’s economy has slowed and is likely to slow further a hard landing is unlikely.

Furthermore, it should be noted that the current slowdown in China should be seen as cyclical.

Structural forces driving growth remain very strong.

These include strong productivity growth, huge competitive advantages, rapid urbanisation, surging consumer demand and very strong investment.

With per capita income levels still very low China’s rapid growth phase has a long way to go, probably over several decades.

China’s slowdown will cut into commodity demand

While China’s growth is unlikely to collapse, a slowdown from 12% last year to 8% in 2009 coming on top of the recession in the US, Europe and Japan will cut sharply into commodity demand.

Stockpiles of iron ore and coal are already building up in China’s ports and it has reportedly asked some resource companies to slow their supply down.

In fact, it’s likely 2009 will see demand running below supply in the case of several commodities.

Commodity prices (and resource shares) are currently very oversold after recent sharp falls and due for a decent short term rally, but the unfolding slump in global growth (made worse by slower growth in China) suggests they are yet to see their cyclical bottom.

Commodity prices normally lag the economic cycle and are only likely to resume their long term bull market once it becomes clear global growth is starting to head higher.

This is unlikely for at least another six to nine months.

For Australia, this suggests a falling terms of trade and softening export demand growth.

 

What about the Chinese share market?

From its high in October last year to its recent low the Chinese share market has fallen nearly 70%.

This has restored value to Chinese shares, with the price to earnings multiple falling from over 50 times back to 16 times which is below its long term average.

Additionally: the liquidity cycle for shares is turning more positive with easier monetary conditions; the Government is becoming active in trying to boost the market with moves to abolish stamp duty on share purchases, allow margin trading, encourage buybacks and delay the sale of nontradeable shares; and investor sentiment in China seems to have reached the despair often seen around bear market lows.

While it’s too early to be confident the market has bottomed, particularly with earnings estimates still falling and investor panic feeding on itself, Chinese shares are looking attractive from a long term perspective.

Conclusion

China’s economy has slowed from over 12% growth to 9% and is likely to slow even further.

On top of the recession now unfolding in developed countries this will cut into commodity demand over the year ahead and suggests commodity prices may still fall further.

However, China’s downturn is unlikely to turn into a hard landing and does nothing to detract from China’s positive long term outlook, which, if anything, is being enhanced in a relative sense by the debilitating problems the US faces.

IMPORTANT: AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decisions. 

bigdollars11

Classic scene from Trading Places

mikecivic2003


Recently i would like to invest in gold, is it worth my effort to invest in gold commodity? which is better gold bar or gold coins? and what is the minimum weight of the gold that i should invest? thanks

djenyns

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