Investing in Commodities

Commodities are raw materials that are sold in bulk, such as oil, wheat, silver, gold, pork bellies, oranges, and cocoa. Onions are specifically excluded from the commodity list, thanks to a 1958 law. The Commodity Futures Trading Commission (CFTC) regulates the markets where commodity futures and options are traded. Its mission is to protect you as an investor from fraud, manipulation and other abusive practices.

Interested in investing in commodities? You can do this several different ways. You can invest in stocks of mining or energy companies. You can invest in funds or ETFs (such as streetTRACKS Gold Shares (GLD))that specialize in natural resources. A few even specialize in buying and selling commodities. But don't wade into the futures market alone: amateurs lose early and often. In fact, commodities trading is one of the riskiest investment activities around. Don’t invest in commodity futures unless you have a diversified investment portfolio and you won’t be hurt by large losses that can happen in almost no time.