How Do Investors Usually Profit in the Commodity Exchange?

The average investor is not involved in complicated options, futures or derivatives on the commodity exchange market. These more complex and risky options are typically exercised by hedge funds of commodities brokers. If you are a fairly average investor, though, you can get a piece of the profits on a much simpler level.

Commodity Mutual Funds

If you purchase shares in a mutual fund that holds a portfolio of commodities, you are engaged in the commodity exchange. You will profit if you own commodities through the fund that go up in value. Some riskier hedge funds catering to bolder investments may even use options and futures contracts to build wealth for investors. All you, the investor, have to do though is purchase the shares.

Commodity Indexes

If you would rather "go it alone" but like the idea of a diversified commodity portfolio, consider purchasing an index of commodities. This allows you to buy a stake in a group of commodities on the general market. For example, the S&P GSCI is an index tracking a wide array of the most commonly traded commodities on the market. You can buy into this index to move your money from another currency, like the dollar, into actual commodities for investment and profit.

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