Commodities investment through an Irish broker?

W

Wing&Prayer

Registered User
Messages
16
Wheat is up 80% in the last ten months. Copper and gold is also rising. Oil is at a record high. As demand for basic commodities increases in the B(rasil) R(ussia) I(ndia) C(hina) regions, should long term investment in these areas become a serious consideration? Equities markets, it would appear, have moved past the 'readjustment' phase into the 'notonyourlife' phase as US rate instability and uncertainty continues to show no immediate sign of recovery.

Given the general uncertainty about commodities markets - where does one start investigating investment possibilities? Is there such a thing as an Irish based broker capable of providing advice in the area?
 
Wing&Prayer said:
Wheat is up 80% in the last ten months. Copper and gold is also rising. Oil is at a record high. As demand for basic commodities increases in the B(rasil) R(ussia) I(ndia) C(hina) regions, should long term investment in these areas become a serious consideration? Equities markets, it would appear, have moved past the 'readjustment' phase into the 'notonyourlife' phase as US rate instability and uncertainty continues to show no immediate sign of recovery.

Given the general uncertainty about commodities markets - where does one start investigating investment possibilities? Is there such a thing as an Irish based broker capable of providing advice in the area?
Click to expand...

See thread http://www.askaboutmoney.com/showthread.php?t=63277 for internet sites. Never go to a broker. Slowly becoming redundant due to the internet. Taking higher commissions, when you could easily do it yourself for less. With a little research of course. Forget about BRIC, that's 2005.
 
See thread http://www.askaboutmoney.com/showthread.php?t=63277 for internet sites. Never go to a broker. Slowly becoming redundant due to the internet. Taking higher commissions, when you could easily do it yourself for less. With a little research of course.
Thanks MichaelDes - Had a look at the thread, interesting ideas on Argentinian farmland however I was more interested in long term investment in commodities - maybe I missed something!:) Help!

So brokers out - internet trading much favoured. A complete investment virgin here - Does anybody know of favoured internet trading sites which are open to commodities trading or is the majority of this type of trading done on US based internet sites???
 
I think that you should do some additional research into what commodity funds are available to the Irish investor and stick with that, especially as you have never invested before.

You can buy into some of these collective investment funds without initial commissions and an annual fund management charge of around 1%.

If thats too expensive then try an Exchange Traded Fund (ETF).
 
F. Kruger said:
I think that you should do some additional research into what commodity funds are available to the Irish investor and stick with that, especially as you have never invested before.

You can buy into some of these collective investment funds without initial commissions and an annual fund management charge of around 1%.

If thats too expensive then try an Exchange Traded Fund (ETF).
Click to expand...

You can virtual trade (without need of any money) on one or two sites, so you can get the hang of it. Set downside limits though - poeple get red mist.
 
i have read alot about commodity investing over the last few years, i agree that it is a bull market but nothing i have read has convinced me to invest directly in commodities futures, i simply don't know enough about it. However i am invested in companies that sell commodities like oil and mining companies and have done well but nothing spectacular. At least this way you can sit out the market falls until the long term trend turns back in your favour. With futures you are paying a specific price for a commodity at some future date, i don't think this is for amatures. Wheat may be in a bull market but what if the futures markets have been over optimistic in there pricing, it still maybe a great price (if you are the producer) but you have paid too much and will make a loss on this trade. I know there are tools to roll over on contracts but it is not for the faint hearted.
 
joe sod said:
i have read alot about commodity investing over the last few years, i agree that it is a bull market but nothing i have read has convinced me to invest directly in commodities futures, i simply don't know enough about it. However i am invested in companies that sell commodities like oil and mining companies and have done well but nothing spectacular. At least this way you can sit out the market falls until the long term trend turns back in your favour. With futures you are paying a specific price for a commodity at some future date, i don't think this is for amatures. Wheat may be in a bull market but what if the futures markets have been over optimistic in there pricing, it still maybe a great price (if you are the producer) but you have paid too much and will make a loss on this trade. I know there are tools to roll over on contracts but it is not for the faint hearted.
Click to expand...

Good advice. You also incur the cost of contango as well. Oil futures recently went into backwardation (they may no longer be I'm not sure). However, since about 2005 someone continuously rolling near month futures contracts for oil has needed about 10% appreciation in the price of the underlying commodity just to meet the contango.

That's a serious dent in performance even in a bull market!
 
MichaelDes said:
Please do not use futures unless you are a sophisticated investor. Are'nt options safer. Hammersmith council got burn't with futures seriously in the 1990's.
Click to expand...

Did Joe Sod not say that investing directly in commodity futures was a bad idea for unsophisticated investors?

I wouldn't consider options safer. Okay, your loss is limited to the premium but most investors will be uncomfortable with the leverage provided and unlikely to benefit even if the markets moves as anticipated.

It's with good reason that the people making money are usually those who are selling the options.
 
Wing & Prayer.
This is something I've been looking into for the past number of months because personal I feel Commodities are a good purchase for someone looking for something a bit different e..g. other than property or shares etc.
I ended up focusing on ETF's as they are a cheap and easy way to track Comms.
The following are the sites I found
EasyETF
Ishares
ETF Securities.

I personal brought the Argiculture basket 'ETFSecurities' ETF.
This is traded via the London Stock Exchange so was able to buy it in the usual manner via a on-line broker e.g Sharewatch etc.
 
Dman, and all other contributers - a sincere thank you. Due to a recent family berevement I haven't been keeping tabs here. Will most certainly try the virtual trade route and seriously consider ETF.
I understand that commodity booms are cyclical and a lot of the commodity 'pushers' predicting that this steady rise should continue for approx another 7 - 10 years, however one would have to categorise the wheat explosion over the past 12 months as something more than 'steady'. Expect 'Brennans' to double the price of a loaf over the coming weeks!
In the same vain - if the price of a barrell of oil has increased from $35 to almost $80 in the last four years... why has that price increase not been experienced at the pumps??? Food for thought...
 
Wing&Prayer said:
In the same vain - if the price of a barrell of oil has increased from $35 to almost $80 in the last four years... why has that price increase not been experienced at the pumps??? Food for thought...
Click to expand...

It has but the impact has been lessened by the weakened dollar
 
Wing&Prayer;493919 )Given the general uncertainty about commodities markets - where does one start investigating investment possibilities? Is there such a thing as an Irish based broker capable of providing advice in the area?[/quote said:
Read Mark Shipmans book, The next big investment boom, he was on late late show last year, predicted slow down in housing market and predicts
boom in commodities. There is a lot of money flowing in and out of commodity markets, good long term gamble i reckon, as people move from away from property investments. I'd agree stay away from futures. Research fundamentals, for instance wheat production in eastern european countries has surged, australia down due to drought. Theres also Glanbia, closer to home, they're investing 4.5 million in asia pacific region and also 22 million in nigeria's fast growing consumer market. (milk powders)I use Computershare, very straight forward. Made my first purchase with them bought 100 shares in Tullow Oil, not doing bad. Good luck
Click to expand...
 
investing in soft commodities and agriculture seems to be very much on the radar this year. However i do not believe in mark shipmans strategy of investing directly in commodities futures. Also food companies and agriculture companies like glanbia are more on the processing side than on the production side. Is there not a question of their margins being squeezed by increased buying costs with raw materials but also resistance from the big retailers to pass this onto the consumer. Also because there is so little potential companies to invest in their values can and i think are being driven very high by speculative money rushing in to take advantage of the trend. Of all the commodities companies i think the big oil and energy companies have the most attractive valuations and are not bopped about too much by speculative money.
 
joe sod said:
Also food companies and agriculture companies like glanbia are more on the processing side than on the production side. Is there not a question of their margins being squeezed by increased buying costs with raw materials but also resistance from the big retailers to pass this onto the consumer.
Click to expand...

Also under a new E.U. directive irish farmers will be paid about 4% less.
Wheat prices down at the moment, interesting sector to watch.
 
You must log in or register to reply here.
Back
Top