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Commodity Investment : Understanding, Profit and Loss, and How

 Commodity investing can be an option nowadays. The prospect of investment in commodities in the future is still very promising, such as crude oil, coal, gold, to agriculture in the form of rubber, palm oil, paper, and others.


You can profit with commodity investments. Because, commodity prices are currently rising, even predicted to be high until next year. That is, there is still a chance cuan.

Commodity Investment
Commodity Investment

Understanding Commodity Investment

Commodity investment is the activity of investing in basic products or goods that can be traded or can be exchanged for other goods that have a commensurate value.

Commodity investment has actually been going on for a long time. Long before there were investments in stocks and bonds. The commodity of a business becomes a popular and profitable means of investment.

Some traditional commodities include rubber, cocoa, gold, beef, oil, and natural gas. But there are commodities traded on futures exchanges, namely financial products, such as foreign currencies (foreign exchange / forex) and indices.

Commodity Investment
Commodity Investment

How to Invest in Commodities

Investment options in commodity markets can be done in several ways : 

1. Direct commodity investment

Direct commodity investment is physical investment. Usually for direct commodity investment requires large capital.

An example of you having a coal mine. Then make sales at home and abroad or exports.

2. Indirect commodity investment

The way to invest indirect commodities is to buy shares in commodity companies, or buy stock mutual funds whose funds are placed on commodity-based stocks.

Examples of buying shares of coal issuers, such as ADRO, PTBA, ITMG, INDY, or companies engaged in the commodity sector. Capital to buy shares does not need to be up to millions of rupiah.

Buying ADRO shares for example. The share price of PT Adaro Energy Tbk is Rp 1,695 per share. It only takes a capital of Rp 169,500 to buy one lot of shares of the issuer.

Advantages and Disadvantages of Commodity Investment

Whatever form it wants directly or indirectly, here are the advantages and disadvantages of commodity investment:

Advantage

Protecting against the impact of inflation. Usually commodity demand tends to be high if inflation increases, thus pushing up commodity prices. Even if the U.S. dollar weakens, commodity prices will rise.

Commodity prices fluctuated, last year was cheap, this year it jumped so investors could maximize profits. For example, buy the issuer's shares when commodity prices fall, and sell them when they are high.

Loss

Commodity fluctuations are higher than other types of investments. Commodity futures investors should be more careful because there must be speculation that has an impact on the performance of the contract. So investors need to manage this risk on their own.
There are geopolitical risks that investors must face, particularly if direct commodity investment is export-oriented. Because, this concerns between countries with very strict rules.

Types of Commodity Investments

Here are the types of commodity investments that can be an option to reap cuan:

1. Agricultural commodity investment

Agricultural commodity investment is investment activities in plantation products, food crops, aquaculture and fishing, livestock, vegetable and fruit horticultural crops, and forestry.

Investment in plantation commodities, in the form of palm oil, sugarcane, tea, cloves, rubber, tobacco, chocolate, coffee, and others. Food crop commodities, such as rice, corn, tubers, and nuts.

Aquaculture commodities, such as lobster, shrimp, seaweed, and others. While the investment of vegetable and fruit commodities, including onions, chilies, oranges, mangosteen, bananas, and so on.

2. Mining commodity investment

Mining commodity investment is an investment activity in goods or products that are dredged from the bowels of the earth and have a high selling value.

The result of mining activities, both exploration and exploitation are metals and energy. Metal mining products include precious metals and industrial metals.

Precious metals include gold, silver, platinum, and palladium. While industrial metals, namely nickel, copper, bauxite, manganese, iron, aluminum, and others.

If you want to invest in gold as the safest instrument and free from the risk of inflation, you must pay attention to the factors that cause the rise and fall in the price of gold.

Usually if the U.S. dollar weakens, the price of gold will rise and vice versa. Demand and supply also affect the price of gold. Demand rose, the price of gold was eroded.

How to Invest in Gold

The most popular way of investing in gold is to buy physical gold, both gold bullion, gold jewelry, and precious metals. But this traditional way requires storage, such as a safe or other safe place.

Nowadays, online gold investment is again current. Easier and cheaper with a capital of less than Rp 10 thousand. Saving gold on online gold investment platforms made by Pegadaian and Antam, as well as through online shopping sites.

3. Energy commodity investment

Energy commodity investment is investment activities in energy goods or products, such as coal, petroleum, and natural gas. But keep in mind, the price of this commodity is very volatile.

Crude oil prices, for example, are affected by supply and demand. The higher the demand, the higher the price tends to rise. Conversely, when demand decreases, supply remains, there is a decrease in price.

There is a surge in coal demand from China and India due to the energy crisis. As a result, it pushed up coal prices, and this had a positive impact on Indonesia as the largest coal exporter.

A country's geopolitical conditions also have a major impact on crude oil prices. Such tensions in Middle Eastern countries as the world's largest producer of petroleum.

How to Invest in Crude Oil

Investing in crude oil commodities directly is not as easy as investing in other commodities. You can't just buy a barrel of oil.

One barrel equals about 159 liters of crude oil. The price of crude oil is currently around USD 80 per barrel or Rp 1.12 million (exchange rate of Rp 14,000 per USD).

If you buy 100 barrels of oil, it means that the funds that must be poured for investment in this commodity are around Rp 112 million. Not to mention other costs, such as licensing, taxes, and so on.

It is easiest by buying shares of oil companies, or buying stock mutual funds in the energy sector. It's cheaper and the risk is also lower.

Follow This Commodity Investment Strategy If You Want Luber Cuan

Remembering the advice of Lo Kheng Hong, an investor nicknamed Indonesia's Warren Buffett, invest in commodity sector stocks. Because, the benefits of stock investment in other sectors are not as large as in commodities.

He suggested that investors buy shares from the commodity sector when commodity prices are falling, because of course the stock price is cheap, then save it.

Once commodity prices rise, followed by an increase in stock prices, they can be sold immediately. Commodity investing will lead you to success when using the right strategy.

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