Commodities, especially precious metals such as Silver, have been playing an integral part in many investors’ portfolios. Many experts are starting to redefine the conventional understanding of portfolio diversification, choosing to take another look at how we partition our investments between commodities and other products. This need for a “re balance” has caused an increased interest in Silver and Gold as they show signs of stability shortly.
Silver Traders In Dubai are getting ready to meet a new wave of demand brought about by economic threats from all over the world. Are you ready to tailor your plans to changing market scenarios? APM Bullion is here to help you by going over some things you might want to know about commodities and the role they play in diversifying your portfolio. We’ll also look at some commonly traded commodity products that you might come across.
How Does Diversification Protect Against Market Volatility?
Diversification, in terms of financial and economic topics, refers to an investment strategy wherein you aim to lower risks by divesting money across all sorts of markets. A great example is the popular “60/40 Ratio” and how it allocates around 60% of the investor’s capital to stocks while others are put into bonds and other fixed-income products. Other strategies exist that all aim to create a diversified portfolio where risks are low and returns are as high as possible.
Hedging Your Investments Into Commodities
Commodities are known as a “hedge” due to the fact they offer protection from common threats such as inflation rates. The rates of commodities tend to rise alongside inflation rates due to increased demand from service industries. This price behavior is the reason why diversifying your portfolio to carry some commodities is highly recommended by many financial experts.
Another aspect to understand about commodities is that they can be categorized as both hard and soft. Hard commodities tend to be those that can be mined, typically precious metals such as gold and silver. They can also include drilled resources such as natural gasses and oil.
In contrast, soft commodities are products such as agricultural resources like cattle and wheat. Many of these examples are traded on markets that encompass either global or local trade. Due to that, commodities are affected by current supply and demand metrics. Precious metals such as gold offer more stability than gold products as they aren’t subject to exterior factors such as harvest seasons and varying weather conditions.
Investing Into Commodities: What Products Are Available?
Most investors will have access to direct investments into certain commodity classes such as Gold and Silver. Direct investment requires the buyer to have a place to properly store the commodity alongside them handling most aspects of logistics. For gold buyers, this means that you’ll have to secure your gold bullion and be able to transport it.
Other investment products don’t require the buyer to handle logistics but offer some form of exposure to the commodities market. Futures are contracts that allow a buyer to obtain a specific amount of product at a specific time and price. This contract can then be traded to other buyers or kept.
ETFs are another form of Gold Stock that can be bought for exposure to the gold market. Compared to Futures contracts, ETFs are shares offered by the fund representing an amount of gold that’s been bought. However, take note that both Futures and ETFs are affected by fluctuating prices and don’t offer the same level of stability as physical bullion in the long run.
Tailoring Your Investment Strategy With Professionals Like APM Bullion!
The market is in constant flux thanks to recent events and the need for a long-term “safe haven” investment is more pronounced than ever before. If you’re looking for trusted gold traders in Dubai, then APM Bullion is the right partner for the job. Risk is everywhere and mitigating their effects on your portfolio is crucial to any form of financial stability.
You can rely on us to get you the best physical gold and silver bullion products sourced from trusted refineries all over the globe. Our founder, Rakesh Rajdev Rajkot, has made sure that our operations are characterized by professionalism and transparency that separates us from the competition. Visit our website for more information about our products and our proud history of complete client satisfaction!