Investing in commodities can offer a powerful hedge against inflation and diversify your portfolio beyond stocks and bonds. Commodities represent the raw materials the world runs on – oil, gold, wheat and more – and when economic uncertainty strikes, they often shine.
With the rise of online brokers and mobile trading platforms, commodity investing is more accessible than ever. But before diving in, it’s important to understand how commodity markets work, your options and how to manage risk.
What Are Commodities?
Commodities are basic goods used in commerce that are often interchangeable with other goods of the same type. These include:
- Precious Metals: Gold, silver, platinum
- Energy: Crude oil, natural gas
- Agricultural Products: Wheat, corn, soybeans
- Livestock: Cattle, pork bellies
- Industrial Metals: Copper, aluminum
You can invest in commodities directly (e.g. buying physical gold) or indirectly via commodity stocks, ETFs, mutual funds or futures contracts.
Why Invest in Commodities?
Commodities tend to perform well when inflation or economic volatility drives investors away from traditional assets. They can offer:
- Diversification: Commodities often move independently of stocks and bonds.
- Inflation Hedge: Commodity prices typically rise during inflationary periods.
- Growth Potential: Strong demand or supply disruptions can lead to price spikes.
Ways to Invest in Commodities
Here are the most common approaches:
1. Commodity ETFs
Exchange-traded funds (ETFs) offer diversified exposure to commodity sectors without owning the physical assets. They’re ideal for beginners looking to avoid the complexities of futures trading. Here are a few examples:
- Invesco Optimum Yield Diversified Commodity Strategy (Nasdaq: PDBC)
- First Trust Global Tactical Commodity Strategy Fund (Nasdaq: FTGC)
- Bloomberg All Commodity Strategy (ARCA: BCI)
- Invesco DB Commodity Index Tracking Fund (ARCA: DBC)
- iShares S&P GSCI Commodity-Indexed Trust (ARCA: GSG)
- Harbor Commodity All-Weather Strategy ETF (NYSE: HGER)
2. Commodity Stocks
Invest in companies that produce or process commodities such as oil refiners or gold miners. Here are a few examples:
- Alamos Gold (NYSE: AGI)
- Archer-Daniels-Midland Co (NYSE: ADM)
- Wheaton Precious Metals Corp (NYSE: AGI)
- Targa Resources (NYSE: TRGP)
- Agnico Eagle Mines (NYSE: AEM)
- Pilgrim’s Pride (Nasdaq: PPC)
While they offer indirect exposure, commodity stocks still respond to price movements in their underlying markets.
3. Futures Contracts
Futures allow you to speculate on the future price of a commodity. These are high-risk, high-reward instruments best suited for experienced traders.
4. Mutual Funds
Commodity-focused mutual funds pool investor money to buy a mix of commodity-producing companies or derivative contracts. They offer active management but typically come with higher fees.
5. Physical Commodities
Some investors prefer to own physical gold, silver or other tangible assets. This can serve as a hedge in severe market instability though storage and liquidity can be concerns.
Best Commodity Trading Platforms (2025)
Here are the top platforms that make commodity investing accessible and efficient:
1. tastytrade
- Trade futures, micro futures, options and ETFs
- No minimum deposit
- Low commissions per contract
- Great for active traders seeking flexibility
2. eToro
- Access a wide range of commodity ETFs
- Beginner-friendly platform
- Paper trading and educational resources
3. Interactive Brokers
- Offers futures in over 200 countries
- Low trading fees and robust research tools
- Advanced trading interface for professionals
4. NinjaTrader
- Powerful futures trading platform
- Free simulated accounts and extensive charting
- Ideal for hands-on futures traders
5. E*TRADE
- Offers futures and ETFs across markets
- Great mobile and desktop trading tools
- Suitable for long-term and retirement-focused investors
Key Risks of Commodity Investing
Before you dive in, understand the potential pitfalls:
- Volatility: Prices can swing dramatically due to weather, war or policy shifts
- Leverage Risk: Futures contracts use margin, which can magnify both gains and losses
- Single-Stock Exposure: Commodity stocks are still stocks and subject to broader market risk
Tips for New Commodity Investors
- Start small: Use ETFs or mutual funds to get a feel for the market
- Diversify: Don’t bet everything on oil or gold
- Monitor global trends: Commodities are sensitive to macroeconomic changes
- Use demo accounts: Practice trading futures before risking real capital
Should Commodities Be in Your Portfolio?
Commodities can be valuable in a diversified portfolio, especially in uncertain economic environments. They offer protection against inflation and exposure to global growth trends. Just remember: these assets can be volatile. Pair them with a sound risk management plan and a clear investment strategy.
Whether you’re drawn to gold as a haven, oil for its economic sensitivity or agricultural products for their essential role in daily life, commodities can be a smart long-term addition to your investment tool kit.
Frequently Asked Questions
A
One of the easiest and most beginner-friendly ways to invest in commodities is through exchange-traded funds (ETFs) that provide diversified exposure to various sectors like energy, agriculture or metals. For more direct exposure, some investors prefer buying individual commodity stocks or using trading platforms like tastytrade or Interactive Brokers to invest in futures contracts. The best method depends on your risk tolerance and investment goals.
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Beginners should consider starting with commodity ETFs or mutual funds which offer exposure without the complexity of managing futures contracts. Once comfortable using a platform like NinjaTrader or eToro for simulated trading can be a smart way to gain hands-on experience. Starting small, diversifying across sectors and keeping an eye on global trends are key steps to building confidence.
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Yes, commodities are accessible to everyday investors thanks to online brokers and trading apps. Whether you’re interested in physical assets like gold, indirect investments like commodity-producing stocks or advanced tools like futures contracts, there’s a pathway for every experience level. Just be sure to understand the volatility and risks before jumping in.