Is there any way of non leveraged investing in commodities?

[guydebyl]

I am interested in investing in commodities. Am based in Australia. I don't want to day trade because it is too volatile..., just ito nvest in the medium term in eg. copper prices following a sustained trend.. Does anyone know how that can be done? Would appreciate broker sites being quoted.

thanx

 

[Trembling Hand]

Just because you trade on a small margin doesn't mean you have to take you $100,000 and buy $2,000,000 worth of copper.

The margin you pay has nothing to do with it. Ignore the leverage. Tell me why does it matter.

 

[CanOz]

I am interested in investing in commodities. Am based in Australia. I don't want to day trade because it is too volatile..., just ito nvest in the medium term in eg. copper prices following a sustained trend.. Does anyone know how that can be done? Would appreciate broker sites being quoted.

thanx

Well there are a few ways to you could do this but generally equities that are highly exposed to various commods probably the best way to get the benefit of a sustained trend without the leverage of future contracts. The problem with equities though is that if equities in general are out of favor for whatever reason then they may not always reflect the price of the commodity.

Exchange Traded Funds (ETFs) can offer better correlation to commodity prices but are not always as specific as the individual commodity.

Some brokers offer CFD's for some commodity's in "mini" form, so less margin may be required as the contracts are smaller, but its leverage at its most dangerous for those not prepared for it.

I think you should read some more threads and get a better feel for the risk involved with various trading or investment ideas.

Unless you are a big fund or have a big trading account, investing in commodities requires deep pockets and a stomach to handle an open loss.

You can buy actual copper ingots or gold ingots though if you want the actual material.

http://seekingalpha.com/article/30369-commodity-etfs-and-etns has a good ETF finder, to help locate ETF's and their area of investment.

Once you decide the instrument, then you can look for brokers.

There are only a few ideas, but please do some research and ask a few more questions.

Cheers,


CanOz

 

[guydebyl]

Thanks for your advice folks. I'll digest what you have said. I'm actually surprised to have got a response so soon. I'll check again tomorrow to see if there are more suggestions. Yes.. I had read that even shares concentrating on eg mining go down with the rest of the share market when the commodities are going up. That is why I was interested in pure commodities without all the extraneous factors that affect shares. My idea is to ignore the day to day fluctuations and go with a solid upward or downward trend using a moving average as a guide. If I'm leveraged, then the fluctuations will hurt and I then have to depart a market that is generally moving in the direction I have prophesised.

thanx again..

 

[Trembling Hand]

If I'm leveraged, then the fluctuations will hurt and I then have to depart a market that is generally moving in the direction I have prophesised.

Guydebyl this statement is fundamentally wrong. This is a HUGE mistake made by most newbies. Please before you trade do some work on position sizing. Do not trade, especially commodities, until you know why this is wrong.

It don't matter if you are leveraged or not. Leverage is not used to buy more or to increase your risk. The amount you buy depends on the MAX expected move of your instrument. Not how much your dodgy broker will allow you to purchase!!

 

[CanOz]

Guydebyl this statement is fundamentally wrong. This is a HUGE mistake made by most newbies. Please before you trade do some work on position sizing. Do not trade, especially commodities, until you know why this is wrong.

It don't matter if you are leveraged or not. Leverage is not used to buy more or to increase your risk. The amount you buy depends on the MAX expected move of your instrument. Not how much your dodgy broker will allow you to purchase!!

But TH, it reads to me like he is shy of the leverage because his account can't take the normal range of price, which is fine and good to at least recognize that isn't it?

I don't trade futs for the same reason, although my account could take it IF i traded intraday, and i found low risk setups within my limits.

Or am i missing something here?

Cheers,


CanOz

 

[wayneL]

Exchange Traded Funds (ETFs) can offer better correlation to commodity prices but are not always as specific as the individual commodity.

http://etf.stock-encyclopedia.com/category/commodity-etfs.html

 

[CanOz]

http://etf.stock-encyclopedia.com/category/commodity-etfs.html

Struth....did they miss any?

 

[Trembling Hand]

But TH, it reads to me like he is shy of the leverage because his account can't take the normal range of price, which is fine and good to at least recognize that isn't it?

I would say that is probably the case. But then if that is so commodities are probably not the place to be playing. If you have $10,ooo to $20,ooo to trade with and stick to correct position sizing for say copper how much are you going to be able to purchase? Probably a small drum of speaker wire from Dick Smith. I mean why bother. my guess is ya gonna need $200,000 to play with metals on a long term trade.

You can trade the ETFs but you still have the same problem. For something that is not going to ever pay a div and would be an big time out-liner to hit 100% gain. 100% of not much is what??

 

[Kauri]

for copper .. for arguments sake... buy a house or three in the good ole US of A... ( apparently they are going cheaply at the moment)... strip out and sell the plumbing and wiring... and live like a King...
Cheers
...........Kauri

 

[CanOz]

for copper .. for arguments sake... buy a house or three in the good ole US of A... ( apparently they are going cheaply at the moment)... strip out and sell the plumbing and wiring... and live like a King...
Cheers
...........Kauri

You crack me up Kauri

 

[Spanning Tree]

Want to buy some gold on the ASX? Check out GOLD.

http://www.goldbullion.com.au/au/index.php?noMsg=true

 

[Investor123]

I am interested in investing in commodities. Am based in Australia. I don't want to day trade because it is too volatile..., just ito nvest in the medium term in eg. copper prices following a sustained trend.. Does anyone know how that can be done? Would appreciate broker sites being quoted.

thanx

You can buy ETFs in US, here are some of the examples:

Agriculture ETF:
http://finance.google.com/finance?q=DBA

Oil ETF:
http://finance.google.com/finance?q=OIL&hl=en

Base Metal ETF:
http://finance.google.com/finance?q=AMEX:DBB&hl=en

Gold ETF:
http://finance.google.com/finance?q=GLD&hl=en

Silver ETF:
http://finance.google.com/finance?q=SLV&hl=en

 

[guydebyl]

many thanx to all of you. There are many good ideas. This is a great forum site because people are willing to help each other with their knowledge.

I came across a very interesting article. Here is the opening sentence:

"London Stock Exchange (LSE) creates new sector, Exchange Traded Commodities. The new trading platform on the LSE will deal exclusively in Exchange Traded Commodities (ETCs)"

For those who want to read the whole article:

http://chinese-school.netfirms.com/...odities-etcs-london-stock-exchange-vt173.html

Any comments?

 

[Temjin]

I came across a very interesting article. Here is the opening sentence:

"London Stock Exchange (LSE) creates new sector, Exchange Traded Commodities. The new trading platform on the LSE will deal exclusively in Exchange Traded Commodities (ETCs)"

For those who want to read the whole article:

http://chinese-school.netfirms.com/f...nge-vt173.html

Any comments?

Surprisingly, it is the OP who mentioned of the ETFs listed on the LSE.

They are from www.etfsecurities.com

(more specifically, http://etfsecurities.com/en/securities/etfs_securities.asp)

You can buy most of the more common commodities in a non-leveraged way. You can go long and short, and all offered 2 x leverage shares as well.

All shares are dominated in USD and I have purchased all of my past commodity related investments from there. Read their FAQ for more information on how they price their ETFS, their level of security and liquidity.

 

[howardbandy]

Greetings all --

You can also trade the commodity contract non-leveraged. Copper on the NYMEX is about $3.20 a pound, each contract is 25,000 pounds, so full value is $80,000. Margin is $7763.

Put $70,000 into safe treasury bills, and buy (or short) one copper contract with the other $10,000.

That is -- trade one contract for every $80,000 in your trading account.

Thanks,
Howard

 

[Temjin]

Ok, IGNORE WHAT I JUST SAID ABOUT ETFS from etfsecurities.com!

I said it in another forum but I forgot to say it here, there ARE CREDIT RISK involved in owning ETFs from them because the company guaranteeing these shares are AIG!

Unfortunately, AIG was on the verge of collapse (but recently rescused by the Fed, thanksfully!) and some of the ETCs were priced down to $0 (regardless of the underlying value of the commodities), effectively wiping out your investment.

I haven't checked yet, but right now there seem to be liquidity again as the Fed has took over the firm. I'm not sure on this one yet, so I pray for those who have purchased them.

There are a lot of discussions going around with what will happen to etfsecurities.com,

http://boards.fool.co.uk/Message.asp?mid=11222787&sort=whole

As for me, i knew I have made the right decision when I decided to invest with etfsecurities share but only their ETC that has PHYSICAL BULLION allocation. These ETCs are so far unaffected because there are no credit risk, though HSBC is acting as custodian, which I assume to also be too big to fail if it does.

 

[Reealjrd]

I am interested in investing in commodities. Am based in Australia. I don't want to day trade because it is too volatile..., just ito nvest in the medium term in eg. copper prices following a sustained trend.. Does anyone know how that can be done? Would appreciate broker sites being quoted.

thanx

Hello guydeby,

As you have told that you are interested in invesing in commodities. And you have told that you dont want to do intraday trading. But that is the safest way when the market is volital. Because the present market condition is volital and i would suggest you to intraday. Dont go too much on leverage. Because leverage is only a support for you to trade bigger items.