Investing in Commodities For Dummies

✍ Scribed by Amine Bouchentouf

• Publisher: For Dummies
• Year: 2023
• Tongue: English
• Leaves: 290
• Edition: 2
• Category: Library

✦ Synopsis

Minimize risk and maximize profit as a commodities investor

Investing in Commodities For Dummies gives you an in-depth look at how commodities stack up against other assets and advice on how to avoid investing pitfalls. This book shows you how to diversify beyond stocks and bonds by moving money into a market that’s widely viewed as a safe haven during times of turmoil on Wall Street. You can learn to trade gold, silver, heating oil, US cotton, and many of the other things we need and use every day. Check out this easy-to-follow Dummies guide for the basics on breaking into the market, common myths, and a range of trading and investing strategies.

• Get started investing in commodities with step-by-step instructions
• Diversify your portfolio, measure risk, and apply market analysis techniques to commodity markets
• Find useful information and expert tips so you can make informed decisions
• Learn tips for identifying good trades, selling at the right time, and evaluating your hunches

Investing in Commodities For Dummies gives amateur investors―that’s you!―a comprehensive guide to trading, investing, and making money in the commodities arena.

✦ Table of Contents

Title Page
Copyright Page
Table of Contents
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Where to Go from Here
Part 1 Getting Started with Commodities
Chapter 1 Investors, Start Your Engines! The Basics of Commodities
Defining Commodities and Their Investment Characteristics
Going for a Spin: Choosing the Right Investment Vehicle
The futures markets
The equity markets
Publicly traded companies
Master limited partnerships
Managed funds
Physical commodity purchases
Checking Out What’s on the Menu
Energy
Metals
Agricultural products
Chapter 2 The Pros and Cons of Commodities
Why the 21st Century Is the Century of Commodities
Capitalizing on the global population explosion
Profiting from urbanization
Benefiting from industrialization
The BRIC countries
China
Brazil
What Makes Commodities Unique
Gaining from inelasticity
Finding a safe haven
Hedging against inflation
Taking time to bring new sources online
Sell in May and go away? Definitely nay!
Commodities and the Business Cycle
The Pitfalls of Using Leverage
The Real Risks behind Commodities
Sovereign government risk
Geopolitical risk
Speculative risk
Corporate governance risk
Methods for Managing Risk
Due diligence: Just do it
Commodity companies
Managed funds
Futures market
Commodity fundamentals
Diversify, diversify, diversify
Part 2 In Power: Making Money in Energy
Chapter 3 It’s a Crude World: Investing in Crude Oil
Seeing the Crude Realities
Examining global reserve estimates
Looking at production figures
Checking out demand figures
Eyeing imports and exports
Going Up the Crude Chain
Making Big Bucks with Big Oil
Oil companies: Lubricated and firing on all cylinders
Flying solo: Looking at individual oil companies
Oil company ETFs: Strength in numbers
Get your passport ready: Investing overseas
Chapter 4 What a Gas! Investing in Natural Gas
What’s the Use? Looking at Natural Gas Applications
Industrial uses of natural gas
Natural gas in your home
Natural gas’s commercial uses
Generating electricity with natural gas
Natural gas and transportation
Liquefied Natural Gas: Getting Liquid Without Getting Wet
Investing in Natural Gas
Natural selection: Trading nat gas futures
Nat gas companies: The natural choice
Chapter 5 Investing in Renewable and Alternative Energy
Getting to Know Renewable Energy
Sunny delight: Investing in solar energy
Fast and furious: Trading in wind energy
Betting on biomass
Digging Up Additional Energy Sources
Reexamining coal
Coal hard facts
Paint it black
It’s a coal investment
Investing in nuclear power
Uranium equities
Uranium ETF
Uranium futures
Trading electricity
Brushing up on current affairs
Investing in the power industry
Chapter 6 Investing in Energy Companies
Bull’s-Eye! Profiting from Oil Exploration and Production
Going offshore
Staying on dry land
Servicing the oil fields
Investing in Refineries
Becoming an Oil Shipping Magnate
Transportation supply and demand
Crude oil ships ahoy!
Petroleum shipping companies
Avoiding industry risk
The New Kids on the Block: EV Transportation Companies
Part 3 Investing in Metals and Agricultural Products
Chapter 7 All That Glitters: Investing in Gold, Silver, and Platinum
Going for the Gold
Getting to know the gold standard
What makes gold valuable
How to measure gold
Finding ways to invest in gold
Let’s get physical
Gold ETFs
Stocks in gold companies
Gold contracts
Investing in Silver
Checking out the big picture on silver
Getting a sliver of silver in your portfolio
Buying physical silver
Buying the silver ETF
Looking at silver-mining companies
Checking out silver futures contracts
Adding Platinum to Your Investments
Gathering platinum facts and figures
Going platinum
The platinum futures contract
Platinum-mining companies
Chapter 8 Considering Steel, Aluminum, Copper, and Other Metals
Building a Portfolio That’s as Strong as Steel
Steely facts
Investing in steel companies
Illuminating the Details of Aluminum
Just the aluminum facts
Aluminum futures
Aluminum companies
Bringing Copper into Your Metals Mix
Quick copper facts
Copper futures contracts
Copper companies
Palladium: A Metal for the New Millennium
Zooming In on Zinc
Investing in Nickel
Chapter 9 Unearthing Top Mining Companies
Considering Diversified Mining Companies
BHP Billiton
Rio Tinto
Anglo-American
Checking Out Specialized Mining Companies
Newmont Mining: Gold
Wheaton Precious Metals: Silver
Freeport-McMoRan: Copper
Alcoa: Aluminum
ArcelorMittal: Steel
Making Money during the Mining Merger Mania
Chapter 10 Trading Agricultural Products
Giving Your Portfolio a Buzz by Investing in Coffee
Coffee: It’s time for a break
The coffee futures contract: It may be your cup of tea
Ordering up investments in gourmet coffee shops
Warming Up to Cocoa
Investing in Sugar: Sweet Move!
Orange Juice: Refreshingly Good for Your Bottom Line
Investing in Corn
Wondering about Wheat
Trading Soybeans
Soybeans
Soybean oil
Soybean meal
Holy Cow! Investing in Cattle
Live cattle
Feeder cattle
Checking Out Lean Hogs
Trading Frozen Pork Bellies
Part 4 Choosing an Investment Approach
Chapter 11 Welcoming Commodities into Your Portfolio
The Color of Money: Taking Control of Your Financial Life
Looking Ahead: Creating a Financial Road Map
Figuring out your net worth
Identifying your tax bracket
Determining your appetite for risk
Making Room in Your Portfolio for Commodities
Fully Exposed: The Top Ways to Get Exposure to Commodities
Commodity futures
Commodity indexes
Futures commission merchants
Commodity trading advisors
Commodity pool operators
Commodity funds
Commodity mutual funds
Exchange-traded funds
Commodity companies
Publicly traded companies
Master limited partnerships
Chapter 12 Investing in ETFs and Commodity Indexes
Getting to Know ETFs
Accessing Commodity Markets through ETFs
Checking Out Commodity Indexes
Why indexes are useful
How to make money by using an index
Uncovering the Anatomy of a Commodity Index
Noting the Five Major Indexes
The S&P Goldman Sachs Commodity Index
Reuters/Jefferies Commodity Research Bureau Index
Dow Jones Commodity Index
Rogers International Commodities Index
Deutsche Bank Liquid Commodity Index
Determining Which Index to Use
Chapter 13 Getting a Grip on Futures and Options
Taking the Mystery Out of Futures and Options
How to Trade Futures Contracts
Who trades futures?
Getting over the hedge
The truth about speculators
Keeping track of all the pieces
Underlying asset
Underlying quantity
Product grade
Price quote
Price limits
Trading months
Delivery location
Last trading day
Trading hours
Trading Futures on Margin
Figuring Out Where the Futures Market Is Heading
Contango
Backwardation
Trading with Options
Following options in action
Understanding trader talk
Selecting option traits
Call options: Calling all investors
Put options: Putting everything on the line
Looking at American options
Taking the European alternative
Chapter 14 Choosing a Professional and Trading Accounts
Investing in Commodity Mutual Funds
Asking the right questions
Seeing what’s out there
The PIMCO Commodity Real Return Strategy Fund
The Oppenheimer Real Asset Fund
Mastering MLPs
The ABCs of MLPs
The taxman rings once
Cash flow is king
The nuts and bolts of MLP investing
Heads up! Risk and MLPs
Relying on a Commodity Trading Advisor
Jumping into a Commodity Pool
Ready, Set, Invest: Opening an Account and Placing Orders
Choosing the right account
Self-directed account
Managed account
Placing orders
Part 5 The Part of Tens
Chapter 15 Ten Market Indicators You Should Monitor
Consumer Price Index
EIA Inventory Reports
Federal Funds Rate
Gross Domestic Product
London Gold Fix
Nonfarm Payrolls
Purchasing Managers Index
Reuters/Jefferies CRB Index
U.S. Dollar
WTI Crude Oil
Chapter 16 Ten Investment Vehicles for Commodities
Futures Commission Merchant
Commodity Trading Advisor
Commodity Pool Operator
Integrated Commodity Companies
Specialized Commodity Companies
Master Limited Partnerships
Exchange-Traded Funds
Commodity Mutual Funds
Commodity Indexes
Emerging-Market Funds
Index
EULA