Investment in Commodities
Investment in Oil, gold, Silver, Copper, Wheat
Commodities (raw materials) are indeed a tangible asset class, but it can be also assigned to financial investments, because in current days most investments in commodities are made not directly in tangible assets, but through financial instruments (mostly future or ETF) help. And most investors usually do not see those materials even from a distance, and are only profiting from price fluctuations in the markets.
As investment commodities can be assigned those commodities that are tradable on the financial markets. There can be traded many commodities: oil (in some continents gas also), gold, silver, ferrous metals, cheeses, grains, meat, rice and other easily defined quality products.
Raw material price fluctuations may be sudden and unpredictable, dependable on the demand and supply, as well as speculations. Therefore, these investments are not less risky than stocks, and long-term return is not as high as investing in stocks can offer, and this asset class is more popular between short term speculators than long term investors.
