Investing in raw materials in 2022: When is it worth buying?

Step 1: Open an account with an online broker

To trade raw materials, you first need a securities account, compare different online brokers.

The advantage: Regulated brokers are subject to deposit protection, so their assets are still protected in bankruptcy. In addition, you do not have to worry about storage. Instead, the broker takes care of it for you – and is accordingly liable in the event of losses.

Then you have to decide whether you want to invest in commodities for the long term, commodity mutual funds and ETFs are the most advantageous for a long-term investment.

If you are well versed in the risk involved in CFDs, this is another option. A simpler alternative if you want to invest in commodities could be commodity trading with certificates, which you can buy and sell through securities accounts.

Our recommended broker is Capixal – you can open an account here.

After you have clicked the link, enter your details and verify your email address.

Step 2: transfer money

After signing up, it is a good idea to consider how much money you want to invest in commodities. Once you have decided on an amount, pay the corresponding amount into your Capixal account. The deposit works at Capixal via:

The button for making a deposit can be found at the bottom left of your account (see screenshot).

Step 3: the purchase

After you have deposited your credit, look for ” raw materials ” in the bar above. You can then choose between different raw materials. In our example, we choose the raw material gold. This window then opens:

Here you choose how much money you want to buy raw materials for. You can also set whether you want to trade with or without leverage (with leverage if you want to trade, without if you want to hold on to for a longer period of time).

You can also use the Stop Loss and Take Profit values ​​to set whether your raw materials should be sold automatically if a certain value is exceeded or not reached.

And that was about it. If you click on the “ Open Trade ” button, your commodities are directly in your portfolio!

Raw material price fluctuations: This is how one assesses the raw material market

Rising or falling raw material prices have a direct impact on economic activity and consumer prices. Consumers notice a rise in the oil price when they deliver heating oil or when they next fill up their car.

Rising energy prices can also have a negative impact on the shares of industrial companies because large companies have high energy consumption and thus sharply rising energy costs.

Consumers notice the economic development on the raw material markets through higher prices in the supermarket or at the petrol station.

Investors with a flair for commodities could also benefit from high energy prices.

Best raw materials in comparison: which raw materials should you invest in?

A wide variety of raw material assets are traded on the markets. Thanks to the financial industry, you, as a private investor, can invest in almost any commodity.

Before investing, it is essential to know which commodity you want to invest in.

Above all, precious and industrial metals, agricultural raw materials, and crude oil play essential roles in capital markets. In addition to gold and silver, precious metals are all metals that are corrosion-resistant. Platinum, palladium and rare earth are also traded on the global commodity markets.

The gold price is particularly interesting for private investors. Many are concerned with the question of whether it might be worthwhile to speculate on a rising gold price. Investors also have a keen interest in the development of industrial metals such as aluminum, lead, copper, nickel, zinc and tin.

“ Soft Commodities ” are agricultural commodities. This includes various types of grain, sugar and agricultural products such as coffee and cotton. The coffee trade should not be underestimated here: the global trade volume is greater here than with most other raw materials.

Renewable raw materials are renewable raw materials. This includes agricultural products such as wood, vegetable oils or sugar. That should be particularly interesting for those investors who want to invest sustainably.

Comparison of commodity indices and commodity prices

Well-known are commodity indices such as the JP Morgan Commodity Curve Index family, JPMCCI for short, which tracks the development of entire commodity sectors. The S&P GSCI, in particular, is often used. The index contains 24 raw materials, the composition is adjusted annually according to the global production volume.

There is also the Thomson Reuters CRB Index, the Bloomberg Commodity Index and the Rogers International Commodity Index (RICI). All of these only list commodities that are tradable.

Global economic growth has the greatest impact on raw material prices. China and the USA, in particular, have a significant impact on the prices of important raw materials and, above all, on the prices of industrial raw materials. If the demand for energy sources or industrially required raw materials increases, then their prices also increase.

The production capacity plays a significant role in setting prices, as commodity producers can respond to possible changes in demand only with a time lag.

In the case of agricultural raw materials, for example, the supply cannot be increased at will at short notice. As an investor, you could benefit from changes in supply and demand when you invest in commodities.

In the case of agricultural commodities, weather phenomena must also be taken into account, as crop failures or long periods of drought can affect the global markets for agricultural commodities.