Pump Up Your Portfolio with Crude Oil Commodities

Although oil has been floundering the last few years, it looks like crude oil commodities may be making a comeback. It is no secret that oil production has faced a number of setbacks. Environmental disasters and political unrest have made many oil companies nervous. While rising fuel prices may at first look like a good thing for the industry, they have forced many people to turn to low-energy vehicles and public transportation. Gone are the days when every car on the road was a fuel-guzzling SUV. After several years of struggle, however, the oil industry is finally getting back on its feet. In particular, a number of small American companies have started to make names for themselves. By taking advantage of the vast stores of local oil, these companies are bringing crude oil commodities home and are making many investors very happy.

Go Small with Crude Oil Commodities

 Most investors make the same mistake when it comes to crude oil commodities. They focus their attention on large oil companies overseas instead of the smaller ones at home. In fact, it is the larger companies that have been facing most of the problems over the last few years. Although smaller companies may not pump, or sell, as much oil overall, their shares cost significantly less. Additionally, companies that drill locally need not spend money transporting their product over vast distances. This means that their profit margins may be greater, even if their overall profits are smaller. As the international oil market becomes increasingly complicated, experts predict that many people will turn to smaller, local companies and start to rely more on locally produced crude oil. These small companies that deal in crude oil commodities are the rising stars of the oil industry, and smart investors will buy their stocks now so that they see huge returns later.

The Market Explodes with Commodities Natural Gas

 Although petroleum may get more air time, commodities natural gas may well be the star of the gas world. Over the last year, this commodity has taken off in popularity. Investors and consumers alike are discovering why this natural commodity is far more valuable than it at first seems.

In general, investors follow consumers when it comes to market trends. If a commodity is popular with the public, those with money are all too willing to jump on board. This is why it is no surprise that natural gas has become so popular with investors over the last year. This energy source powers a number of common household appliances such as heaters and stoves, and it is often looked at as an economical alternative to electricity. While it is inexpensive, however, it is also seen as a luxury item. Gas-powered fireplaces are now common and home gourmets everywhere know that a gas stove is far superior to its electric counterpart. It is no wonder that commodities natural gas has taken off with the public or that investors are jumping on the bandwagon.

 Investing in Commodities Natural Gas

Regardless of its popularity, there are a few things to consider before you jump into a commodities natural gas investment. In order to make a sound investment, you must invest in a sound company. This means that it is important to do some research before you buy any stocks. Finding a company that is just starting out will ensure you a low price, but will not give you the same stability as a company that has had time to establish itself. No matter how established a company is, however, you should familiarize yourself with its mode of operation. Understand how its management is structured and how its finances are run.  Only once you are sure of the financial stability of a company should you invest in commodities natural gas.

What Are Exchange Traded Commodities?

Exchange traded commodities (ETC) have a lot in common with exchange traded funds (ETF). A typical ETF is similar to a mutual fund because it tracks an assortment of assets. By following an index, an ETF gives the trader an opportunity to invest in a wide variety of instruments while avoiding great risk through diversification.

The underlying assets of exchange traded commodities are usually as diverse as those in ETFs. However, they are all commodities. In this way, an ETC is invested a little more narrowly. Some exchange traded commodities follow a single commodity, such as wheat or iron, through investments in various producers of such goods. Others track a selection of related commodities, such as energy or metals.

 Investing in Exchange Traded Commodities

Exchange traded commodities, much like other financial instruments, have their advantages and disadvantages. They are fairly new to the market and not everyone is familiar with their characteristics and their financial possibilities. You can invest in ETCs in two ways. Each form of investment has its advantages and disadvantages.

•             You can invest in exchange traded commodities in the form of futures. Some people prefer this format because it allows them to invest directly in the underlying asset. They also prefer to take advantage of the opportunity to buy ETCs on margin. However, futures contracts in exchange traded commodities are only available in certain markets and are not available to the average trader.

•             You can also invest in ETCs by purchasing shares in the companies, which produce or manage the goods. Instead of buying actual quantities of oil or metal, you invest in oil drillers and miners. Accessibility is the main advantage of this type of trading in ETCs. You can buy them through a broker on nearly any major stock market. However, the value of your shares will be affected by factors other than the accepted value of the exchange traded commodities.

Day Trading Commodities in the 21st Century

You should have a clear understanding of two terms before you start day trading commodities. Commodities are marketable goods. Examples of commodities are wheat, copper and oil. Day trading is a system of investment, which tries to earn money by making quick, daily trades.

Day Trading Commodities FAQ

•             How Much Cash Do You Need to Start Day Trading Commodities?

If you start with anything less than $10,000, you are only going to succeed with a great deal of luck. Counting on luck is a sure recipe for disaster. You need at least $10,000 to diversify your holdings properly. This minimal recommendation is good if you are only hoping to make a small, quick profit. You will need much more if you want to make a living by day trading commodities.

•             How Do You Choose a Broker?

You should choose a broker for his or her low commission rate. This is the most important quality of a broker for day traders. High fees will eat up your profits. Do not go to your broker for advice. They are often just salesmen and are not out to help you. You can find many brokers online if you want to be a day trader in commodities.

•             How Often Should You Trade?

Over-trading is the nemesis of a day trader. However, if you are in this to make money in the short term, you will have to trade more frequently than other investors do. Avoid trading just for the sake of trading. This cripples many day traders who might otherwise have been successful. Sometimes, it is a good idea to stop day trading commodities for a while and watch the market. This is better for your portfolio than day trading commodities too often and paying more in commissions.

Silver Mine Stocks Prove There Is Life After The Conquistadors

There is a lot of debate as to whether silver mine stocks or gold mine stocks will do better in the upcoming year. Simply looking at the underlying fundamentals of the precious metal markets would seem to indicate that they should track each other fairly closely. Yet silver has a number of subsidiary uses that make it an industrial metal play as well as a member of the more prestigious precious metals group.

Silver Mining Stocks in Mexico

Silver has been mined in the Western Hemisphere for nearly five hundred years and yet these areas still contain some of the richest silver mines on the planet.  Mexico has always been a major silver producer. While the country continues to make headlines for its raging drug wars in the northern areas, Mexico continues to have a stable government and most of its most profitable mines are located in areas far away from the violence. Among the many silver mine stocks from Mexico, Fortuna Silver Mines, FSM: NYSE, offers a bonus in its large percentage of gold produced as a byproduct of its normal silver extraction operations.

South American Caveats

Regime change in South America has put a damper on several previously profitable mining ventures. Peru has made investors nervous by electing a government that came to power by specifically scapegoating the mining industry. On the other side of the Andes Mountains, Argentina has abrogated its previous promise of 30-year stability with regard to mining taxes. For this reason, many investors are sitting on the fence until the picture becomes settled one way or the other.

The Pure Play in Silver Mine Stocks

Largely unknown Silver Wheaton Corporation, SLW: NYSE, not only produces 23 million ounces of silver annually from its own mines, but it has also built up a series of business relationships that allow it to act as selling agent for the output of a number of other mines located all over the world. These operations add an additional 20 million ounces of silver to its sales every year and significantly protect the company from the economic decline of any particular mining region, as well as insulate it from the potential for political interference that can wipe out regional silver mine stocks.

The Penny Stock Gold Creates

When you think of penny stock gold is probably not the first thing that comes to mind. However, there is much more to gold investment than simply owning bars of this precious metal. Many other types of companies have profited from gold’s recent spike in prices. In order for gold to exist in treasuries and safe deposit boxes, it must first be explored, mined and processed.

This is where penny stock gold comes into the story. Many companies are trying to take advantage of the sudden rise in gold prices and the accompanying rise in public interest. These penny stock companies are trying to create innovation in some part of the process that extracts gold from the ground.

Four Examples of Penny Stock Gold

•             Gold Reserve Inc. has experienced a 73% increase in its stock value over the last 12 months. Most of those gains are quite recent. This stock appears to be in the middle of a breakout. If you want to get a piece of the profits, you will have to act fast.

•             Cardero Resource Corp is a penny stock gold that has some of the highest potential as well as the highest risk. It grew 68% in six months. Thirty-five percent of that growth occurred over the course of four days.

•             Midway Gold Corp has a market cap of only a little more than $200 million. However, this penny stock grew 335% in just six months. This may be a sign of an extended upward trend.

•             Claude Resources Inc. is penny stock gold that has demonstrated strong improvements in its fundamentals. The company recently experienced a 23% increase in quarterly revenue. This is one of those factors, which tell you that the upward trend in a penny stock gold price is not just hype.

The Mid Cap Silver Stocks Canada Loves

When it comes to silver stocks Canada has always been a major player just as it has in many other extractive industries. The times always change, however, as do environmental standards. In the current market, most of the larger cap Canadian silver stocks have gone south in search of higher quality reserves that are recoverable at lower prices.

While Central and South American Countries Supply The Mines For These Silver Stocks Canada Provides Management and Expertise

One of the Toronto-listed mining stocks that still holds at least a foothold in Canada proper is Silver Standard, TCX:SSO. Silver Standard has diversified its operations all the way from the Great Slave Lake nearly to Tierra del Fuego. SSO’s primary operation is at the Pirquitas mine in northern Argentina. With production just recently underway, Pirquitas expects to produce 8-10 million ounces of silver and 10-12 million pounds of zinc on an annualized basis. The cash flow from this mine has been plowed back into exploratory and development ventures in Ecuador, Mexico, the United States and even up at their Sunrise Lake facility in northern Canada.

Among the many expatriate silver stocks Canada incorporates is Vancouver-based Endeavour Silver, TCX:EDR. Endeavour extracts approximately 3.3 million ounces of silver and 17,000 ounces of gold from its Guanacevi and Guanajuato Mines in Mexico. Endeavour sports a particularly attractive recovery cost of just $5.71 an ounce and expects efficiency improvements to drive that cost down to an even $5.50 an ounce. No matter how low the market price of silver falls, Endeavor is likely to remain in operation at any price due to this low margin. Future growth prospects are very bright down in the sunny south. Both of these companies are silver stocks Canada can and should be proud of.

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Options For Silver Investment In India

Silver investment in India is not as easy as it is in many developed countries.  As of late 2011, there are no Exchange Traded Funds (ETFs) or mutual funds available in India that invest in silver.  However there are plenty of other options available for silver investment in India for residents of India.

While silver ETFs are not currently available for silver investment in India, Indian investors who have brokerage accounts with access to United States issued ETFs and mutual funds can buy and sell United States based silver ETFs and mutual funds.  There are currency risks associated with buying and selling silver ETFs and mutual funds denominated in United States Dollars since any devaluation of the Indian rupee versus the United States Dollar will diminish any silver investment gains; therefore, investing in silver via this route is not the most ideal way for silver investment in India.

During 2011, India’s National Spot Exchange Limited (NSEL), which is an Indian commodities exchange, started offering a product called E-Silver.  Each unit of E-Silver represents 100 grams of silver, and is brought and sold at real-time prices on the NSEL that track world silver prices.  E-Silver is a relatively easy silver investment in India.  E-Silver can either be held in an electronic account or physically delivered to the buyer.

Silver investment in India also includes more traditional methods of silver investment, such as buying silver bullion bars and placing them in safe storage or buying products or jewelry made out of silver.  However, for many Indians storing silver bullion bars or jewelry safely and economically is not a feasible.

While not a direct silver investment, silver investment in India can also be done through the Indian futures market.  Silver futures can be bought and sold in India, which generally track the price changes in the world futures markets.  See Buying and Selling Futures for more information about futures trading.

How Increased Silver Investment In India May Affect Silver Prices

Supply and demand fundamentals for silver are bullish going into 2012.  Supply of silver is limited due to silver mining constraints.  Demand for silver from industrial processes, commercial outfits that make jewelry and silver products, and silver investors has been increasing in recent years, and is likely to continue to increase during 2012.

With over 1.2 Billion people, India is the second most populated country in the world.  While many people in India live in poverty, the growing Indian middle and upper classes are demanding products made from silver and are increasingly turning to silver as an investment vehicle.  With tight silver supplies and increasing silver use and investment in India, India consumers and investors could have a bullish impact on silver prices going forward.

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Demand For Hard Assets Is Positive For Silver Price Projections

Making price projections for commodities is very difficult due to all the variables that affect commodity prices; however, a credible case can be made for bullish silver price projections over the next few years.  Many in the investment community do not realize that silver has actually done better than gold over the past two years, with a gain of 76% for an ounce of silver and only 49% for an ounce of gold since December 2009.

While silver peaked out at $48.58 in April 2011 and now trades in the vicinity of $32.00 per ounce, there is no reason to abandon bullish silver price projections for the foreseeable future.  The reasons for the silver rally to nearly $50 per ounce in April 2011 are still present.  Silver is a hard asset that is desirable during times of economic upheaval and currency debasement.  With the European Debt Crisis increasing the chances that the European Central Bank will be forced to start printing Euros, and the possibility that the United States Federal Reserve Bank may engage in additional quantitative easing if the economy slows down in 2012, hard assets such as silver will remain in demand and should increase in price in coming years, as fiat currencies are devalued.

The Bullish Case for Silver Price Projections

Besides the likelihood that central banks in Europe and the United States will increase the supply of Euros and Dollars in 2012 to bolster their economies and ease their debt burdens, there are other reasons to be bullish regarding silver price projections for 2012 and beyond.

Supply and demand fundamentals for silver indicate bullish silver price projections.  Only one Billion ounces of silver bullion is available for consumption by industries that use silver in industrial processes, commercial outfits that make jewelry and silver products, and silver investors.  Unlike gold, silver is an industrial metal which has an industrial base of demand beyond jewelry and investment.  The current supply of silver is barely adequate to keep up with demand for silver.  Any uptick in demand for silver, will lead to an increase in the price of silver.

Declining base metal production is a bullish indicator for silver price projections.  Much of the silver that is currently mined out of the earth is a byproduct of base metals mining.  If the rate of base metal mining decreases in coming years, due to less demand from stagnating industrialized economies for base metals, the supply of silver will decrease, which will lead to an increase in the price of silver.

The advantage that silver has over gold is that since silver is an industrial metal, demand for silver increases as the world economy strengthens, so if 2012 and beyond are surprisingly strong economic years, then the case for bullish silver price projections remains intact.  On the flip side of the coin, if 2012 and beyond are weak economic years, central banks are likely to flood their economies with money, which also keeps the bullish silver price projections intact.

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Cotton Commodity: The Fibers of a Good Investment

While many investors have been focusing their efforts on commodities such as corn and oil, others are discovering that investing in cotton commodity can result in large returns. There are a number of reasons why cotton is seeing such a huge increase in popularity. Over the last few decades, many clothing manufacturers have turned away from natural fibers. Inexpensive clothing has been manufactured using synthetic materials such as polyester and rayon. Natural fibers, such as silk and cashmere, were considered to be luxury materials that were afforded only by the wealthy. In recent years, however, the organic movement has encouraged the use of natural fibers nearly as often as it has pushed the consumption of organic fruits and vegetables. Cotton, one of the most abundant and affordable natural fibers, has seen a sharp increase in popularity. Cotton commodity prices have accordingly.

Smart Investments in Cotton Commodity

If you are considering investing in cotton commodity, there are a few things you can do to make sure that your investment pays off. First, be aware that, like many commodities, cotton is a natural, crop-grown product. Its production can be drastically encouraged or hindered by uncontrollable forces such as the weather. If you want to invest in cotton successfully, you should immerse yourself in the world of cotton production. Read farmers’ reports and study weather patterns so you know how crops are expected to fare.

Keeping up with the latest fashion trends can also help you predict the movement of the cotton market. Clothing manufacture is the most common use for cotton fibers. When the runways of New York and Paris are filled with billowing layers of natural cotton, you can be sure that cotton commodity will soon be in demand and that cotton prices are sure to rise.