Humans have been using commodities, since the beginning of history. This consumption has created a necessity to trade commodities. However, as financial markets advances, trading commodities became a business unto itself. Commodities are like stocks and other securities. Commodity tips are preferred by maximum number of traders to gain the knowledge about market performance. The values of commodities could theoretically go up and down over the long term.
Some experts have suggested that the future holds a particularly good time to be invested in commodities. Also there are several demographic factors which make commodities a more preferable investment as compared to the others.
Some of the major reasons for an investor to be bullish on commodities are as follows:
1.Population explosion: The world is at a point of population explosion. Almost each and every country in the world is experiencing record increases in their population. Commodities are very essential in nature. Hence, if the number of people present in the world increases, so does the demand for essential commodities. Also there are several studies have done, which predict a shortage of essential commodities and a resulting extreme scarcity. As an investor’s point of view
he demand is very high and there is almost zero chance of it dropping down in the future. Therefore investing in commodities is a good investment, however, the given current valuation is appropriate.
2.Urbanization: Many developing countries are urbanizing at a speed which has not been heard of before. Few developing countries like china and India are urbanizing with a great pace. At the present situation less than 15% of the world’s population resides in cities. Whereas, this rate has expected to be higher than 50% by 2030. Many newer smart cities are being built to accommodate the population and the real estate sector is in a boom. This is also a very positive scenario for commodities. This is because many metals like iron and steel are extensively used in the construction of houses and buildings
The more houses and buildings are being built, the more demand for these commodities will increase. This situation is expected to stay for several years. Once again this represents a stable investment from the investor’s point of view.
3.No market manipulation: Commodity market is not prone to market manipulation. Whereas, stock markets are prone to market manipulation. There is no company specific information which can make or break the markets. The commodities market is spread across the worldwide. Also, the commodity market performs good in a decline in economic. A prediction has been made by many economist that such a period is coming in the near future. Thus, to hold on to some commodities it is a good idea for being the main defensive elements in your portfolio.
Trading in commodities is fruitful in present as well as in future. As per the above explained points investing in commodities is profitable investment in very extreme market conditions. Also, taking services from a well known stock market advisory can be a good option for gaining market knowledge and for earning good returns.