Gold has a dual personality. It is a “store of value” and it’s an industrial commodity used mainly in jewelry but also in dentistry and electronics. The industrial use of gold declines whenever the price rises. The gold price, at least in the short run, is a barometer of world anxiety. Bad news for humanity is good news for gold and the opposite holds true. An outbreak of peace and goodwill on this planet would cause a crash in the gold price. Aside from the flow of political anxiety, the major determinant of the gold price is inflation- more specifically, the extent to which inflation prompts a flight from paper money ( and investments such as bonds).

Gold performs the best when inflationary expectations are rising but interest rates are not yet in the stratosphere. Extremely high interest rates tend to depress gold because borrowing costs then become a deterrent to speculators who buy gold futures on margin. Moreover, gold, which produces no income, becomes less attractive to some investors when the yields on money-market securities are exceptionally high.

Since the inflation rate is strongly influenced by increases in energy costs, there exists a correlation between the price of golf and the cost or a barrel of oil.

The conventional wisdom is that most investors should consider putting 5 percent of their assets into gold and 15 percent or more when inflation looks particularly threatening. In addition to being a hedge against high inflation, gold investments usually hold up or rise in price when there is a big slump in the stock market; they are, in effect, a form of “disaster insurance.

Commodities have received a lot of attention during the last few years. Much of this comes from the fact that China and India’s economies are beginning to take off and they need them to fuel this expansion. Gold, more than the other commodities has gotten lots of attention simply because the US greenback has been in steady decline. As such most folks are worried about the value of their money and need to use gold as protection against inflation. While the average person does not understand the way to trade commodities they can use stocks as a substitute as there are several that mirror their performance.

One of the most well liked gold ETFs uses the ticker symbol GLD. Some of the gold producers include corporations like Agnico Eagle Mines ( AEM ) and Gold Corp. (GG), and Newmont Mining Corporation (NEM) which closely mirror the performance of gold.

If you are interested in investing in oil

If you are interested in wheat or corn then you can check out the fund DBA, {which deals in agriculture.|which deals in farming.| Ifyou’re looking to get into natural gas then you can invest in UNG. For coffee you can look at a company like Starbucks (SBX)which has an inverse relation to the commodity.
If you have not traded before you should start off by using a simulator.

If after 3-6 months you have mastered that then you need to start off by using one contract. But remember education is key in this business and you should always be learning and growing since the markets are continually changing. While there are many good books available nothing can substitute actually placing trades even if they are only simulated ones.

With so much information thrown around there, and people with a variety of agendas and reasons for promotiing them, it’s hard to nail down solid, usable information that can help us build our wealth.

There is one thing study and study shows though, and that is – regardless of the investment vehicle or sector – investors in it for the long haul do far better than those trying to time the market and make a quick killing; or others that move in and out of the market on the smallest snippet of rumor they think is news, hoping to gain an advantage that way.

It really is folly to follow that practice, and even those that manage to hold on to their money don’t build their wealth like those long-term investors do.

Of course this assumes the long term investor has done their research and homework, and understand the way things are trending.

This is the same with those who trade in commodities. As one of most knowledgeable men in commodities, Jim Rogers says about market timing, he’s the worst one at it, and he doesn’t think that way. He’s in it for the rest of his life, and when he invests in commodities he’s thinking in terms of a decade or more, not a short period of time.

What this does is discipline a commodities trader to not follow the whims and short-term swings that happen in all market sectors, but especially in commodities.

There seem to be more rumors and gossip pertaining to commodities than any other sector. Most of it is false, and very little of it true. But even when the news and information is true, you hear so many people with differing viewpoints talking about it, that it’s more confusing when you’re done listening than when you started.

When you’re in it for the long haul none of this matters, as the short term swings won’t have an impact upon you, and only those ruled by the herd mentality following every wind of information will attempt to make a little profit on it. Most of them fail.

Anyway, the point is to have a long term investing horizon, do your research thoroughly, and with the best information available make your decisions.