Investing In Stocks Tied To Commodities

There is a rising demand for commodities in the world today. You can profit from this by investing in stocks that produce and sell these commodities. Here is what the demand landscape looks today and why it will only get bigger as time passes.

The two biggest factors in the increase in demand for commodities are China and India. No, they are not new countries. In fact, they are two of the oldest civilizations in the world. The thing that is changing is that they are rising economies with a rising middle class. These are two countries that hold almost half the world’s population, and they are getting richer.

That means they will need raw materials like copper, silver, natural gas, building materials and food in increasing measure. That will be good for mining stocks, agricultural stocks and energy stocks in the US. These are things that we can still export to other countries on the most part. Even if we don’t export these commodities, we have US-based companies that are producing these things and selling them to China and India.

Basics About the Worlds Demand for Commodities

Commodities and basic materials are very much in demand all around the world. The rapid growth of the emerging markets has sparked this rise and it is not expected to ever go back to where it was. That is why you need to understand the stock market basics for this demand of commodities around the globe.

You will want to invest in stocks that are somehow connected to the commodities trade. The rise of emerging markets is the catalyst for this. These economies are creating a middle class that is increasingly consuming more and more goods.

The agricultural sector should boom in the next few years, mostly driven by demand from China. I would invest in stocks that produce and export food. Actually, a lot of investment banks are buying up agricultural properties right now. As always, they are positioning themselves to profit from this boom.

The world is also going to need things like copper, iron and aluminum. These are raw materials that will be needed to produce the consumer goods that will increasingly be in demand. Find a list of stocks here.

Commodity ETFs

Another great way to invest in commodities in the stock market is via ETFs, or exchange traded funds. These are tied directly to prices in commodities markets like oil, gold and silver. There are ETFs for virtually all of these hard assets, including currencies.

There are ones that go long, go short, or even double long and double short. There are options for everyone.

Why I Like Natural Gas ETFs

There are a couple of things that I like about natural gas ETFs in particlar. I know the industry isn’t making tons of money right now, but they will. It’s the fuel of the future. More and more companies are building gas power plants and less coal fired plants. That is because it is cleaner and easier to get government approval.

The thing is, we are running out of crude oil. That is a known fact. Prices will soar and supply will be limited. That means more and more things will start to be powered by other fuel sources. I think natural gas will be one of them.

The other factor is the world’s concern about climate change and global warming. One of the biggest contributors to this is coal fired power plants. China is said to be building one new one every six weeks. As the world moves toward cleaning our atmosphere, we will see the increased use of natural gas for producing electricity.