Investing in commodities is a pretty popular investment choice for investors who want to diversify their portfolio, and it didn’t start today. It’s been here for ages, and millions of investors across the globe have made a fortune investing in commodities.
For those new to investing in commodities, it would interest you to know that commodities are physical assets that can be traded on various exchanges. What makes commodities an attractive investment option is the unique benefits they offer.
However, with the tons of commodities available out there to invest in, it can be pretty challenging to determine which ones are the best to invest in for the year 2023.
But because we want to make your job easy, we have compiled a list of the top ten commodities we think will deliver the best returns in 2023. After reading this guide, you should be able to make an informed decision.
Key takeaways
- Commodities that are in high demand and have strong supply fundamentals are likely to be good investments.
- Consider investing in commodities that are poised to benefit from macroeconomic trends, such as sustainable energy and climate change.
- Copper, lithium, and uranium are some of the top commodities to watch in 2023 due to their potential for growth.
- Agricultural commodities such as soybeans and corn may also be worth considering, given their increasing demand for food and biofuels.
- It is important to conduct thorough research and manage risks when investing in commodities, as they can be volatile and subject to a range of factors that can affect their price.
Gold
If you haven’t added gold to your portfolio, we think you should seriously consider doing that right now.
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Cryptocurrency assets are volatile in nature. Buy and trade at your own risk.
Trading with financial instruments carries high level of risks that is not suitable for all investors. Before making any investment decisions, you should seek advice from independent financial advisor to ensure you understand the risks involved.
Trading with financial instruments carries high level of risks that is not suitable for all investors. Before making any investment decisions, you should seek advice from independent financial advisor to ensure you understand the risks involved.
Gold is among the most regularly traded commodities. And since it is a precious metal with myriads of use cases, there is a continuous demand for it.
What makes gold such a rare commodity is its rarity. This has skyrocketed its competitive demand to an estimated 170,000 tonnes worldwide.
While gold is used widely in the jewelry trade, it can also be purchased as an investment in its bar or base form.
With inflation figures at an all-time high, there is no better time than now to invest in gold, thanks to its anti-inflation properties.
Also, with the banking crisis currently ravaging the finance industry, many investors are turning their attention to gold to hedge their portfolios against the looming financial crisis.
Silver
Are you looking for a commodity that has the potential to generate 10x returns in the long term? Then you’ll not be disappointed to invest in Silver.
Like gold, silver is also a precious metal that is appealing to many investors. Silver shares a lot of similarities with gold; little wonder why it attracts a lot of demand.
Besides being used in the jewelry trade, silver has a lot of use cases. While its rarity has been linked to its high demand, what makes it an attractive investment option for many investors is that it is generally considered a safe investment.
As the crises in the financial market continue to rage on, especially with more banks going out of business, we expect more investors to turn their attention to commodities like silver. This should push the price of silver higher in the coming months.
For those who have a long-term investment plan, you won’t go wrong adding silver to your portfolio as the opportunities for profit are incredibly high.
Oil
Millions of investors have made a fortune investing in oil, and we believe that investing in oil is still a pretty good move for anyone looking for a commodity with the potential for a 20x return.
While many people consider crude oil as a source of energy, it is way more than that.
From petrochemicals to being used to produce lubricants and fertilizers to acting as raw materials for producing steel, textiles and plastics, crude oil has many exciting use cases. This explains why there is an insane demand for this commodity.
While there are increasing calls to switch attention to green energy solutions, the demand for oil isn’t going away any time soon. With the increased demand for oil at an all-time high, we expect the price of oil to continue to climb steadily.
As we mentioned earlier, some of the most important factors influencing the price of oil are supply and demand, as well as geopolitical and economic developments.
Natural Gas
Just like oil, there is an overwhelming demand for natural gas, and that’s because of its numerous use cases. What’s unique about natural gas is that it is both an energy and fuel source.
Lately, the price of natural gas has been climbing steadily, with experts attributing the recent move in the price of natural gas to increased demand for the commodity. Thanks to being rarer and more expensive to source than crude oil, we expect the price of natural gas to keep rising, albeit with some minor pullback.
Some of the factors impacting the price of natural gas include weather conditions. For example, colder weather tends to increase demand for natural gas, hence the steady price increase.
Although many people are turning their attention to green energy sources, we don’t see the demand for natural gas dropping soon. And as the war in Ukraine continues to rage on, we see the price of natural gas doubling in the long term.
Copper
If there is one commodity in the market we think you should absolutely add to your portfolio, it is copper, and that’s because of its numerous use cases. Thanks to its ability to conduct heat and its resistance to corrosion, the demand for copper, especially from the manufacturing industry, is at an all-time high.
For those who don’t know why there is a tremendous demand for copper, it will interest you to know that copper is used in the manufacturing of piping, electrical wires, roof tiles, industrial machinery and more.
Because of the demand for copper from different industries, it’s no surprise to see the price of copper rise sharply in the last couple of years. While other commodities have taken a breather from their all-time high, copper has continued to swell in value.
And if things continue as they currently are, there is no telling what the value of copper will be in the next couple of months.
So should you invest in copper now? Well, we think there is no better time than now, especially with the increasing demand for this commodity.
Coffee
With coffee becoming a staple in every home, now is an awesome time to add this commodity to your portfolio.
Compared to other agricultural commodities, coffee is the most volatile commodity. This explains why coffee is an attractive investment option for investors looking to make a quick buck from their investment.
Like other commodities, the value of coffee is heavily impacted by a variety of factors, including political and economic turmoil in coffee-producing countries as well as weather conditions.
Other factors driving the price of coffee right now include the transportation cost of transporting coffee beans, the US dollar rate and, of course, public opinions toward the consumption of coffee.
Soybeans
Commodities like soybeans are becoming a popular investment option for people who want to diversify their portfolio and make something reasonable in the long term.
While soybean is high in protein, it is relatively inexpensive to produce. Countries leading the production of soybeans include Brazil, China and India.
Besides their basic use, soybeans have many use cases, including being used as raw materials for animal feeds, soybean oil, milk, meat substitute and even biodiesel.
Some of the factors driving the price of soybeans include demand for products made using soybeans, the price of the US dollar and, of course, weather conditions.
If you’re interested in a low-risk asset that has the potential for massive returns in the long term, then you might want to check out soybeans.
Iron ore
Even though there are tons of commodities on the market that will yield a great deal of return in the long term, Iron ore is becoming a remarkable investment option for investors looking for low-risk assets to invest in.
In the last couple of years, the price of iron ore has continued to rise, thanks to increasing demand from different industries. Unlike other commodities that are rare, iron ore is widely available. Plus, it is easy to mine.
Given the steady supply and demand for iron ore, it doesn’t surprise us that the price of iron ore has remained relatively stable.
While the recent urbanization efforts in China have increased the demand for iron ore, especially as the country continues to supply steel to other nations, experts predict that there will be increased demand for iron ore in the long term. This alone has shot the price of iron ore up by nearly 2x.
For those asking why there is an overwhelming demand for iron ore, it would interest you to know that iron ore has a wide range of uses. From being used in the production of cast iron and steel to the manufacturing of magnets and more, the use cases for iron ore are massive.
Corn
Do you know a lot of investors have made a fortune investing in corn? And you too can make a ton of money investing in this commodity. Like soybeans, corn enjoys a lot of demand, which has impacted its price over the years. More so, it can be used in the production of biofuel, animal feed, food products, and other industrial products.
With the ever-increasing demand for corn, experts believe that the price of maize will continue to skyrocket.
Investors who have a long-term investment focus can add corn to their asset portfolio, as we see the price of corn rising sharply in 2023. More so, with the food crises bedeviling several countries across the globe, the demand for commodities like corn will continue to rise, forcing the price up.
Steel
Steel is fashioned out of iron ore and carbon. And in some rare cases, manganese and tungsten. What makes steel a wonderful investment option is its myriad of use cases. From car manufacturing to medical equipment to home building and more, steel has a wide variety of applications.
Thanks to its wide application, steel has enjoyed significant demand over the years. Also, compared to other commodities, steel is relatively inexpensive to mine.
For those wondering what’s driving the price of steel, it would interest you to know that factors like the availability of raw materials like iron ore, geo-political developments and evolving technologies play a significant role in the price of steel.
Where can you trade commodities?
Wondering where you can trade or invest in some of the commodities we featured in today’s guide? Well, you can trade commodities through many brokers available on the market. While there are hundreds of reliable brokers you can do business with, our top picks include Fidelity, eToro, Charles Schwab, Admiral Markets and a few others.
However, before choosing a broker you think is great for you, you’ll need to factor in:
- Your preferred trading method, such as CFD
- The broker’s experience with the commodity you want to trade
- Fees charged by brokers and more.
Also, keep in mind that your trading method will determine how much you need to invest. Plus, with brokers like eToro and Fidelity who support fractional trading, you can invest as little as $10 in trading commodities.
How to buy commodities on Fidelity
- First, you’ll need to log in to your Fidelity account. If you don’t have one, you’ll need to sign up for an account first.
- Once you’re logged in, navigate to the “Trade” tab at the top of the page and click on “Research.”
- From the “Research” page, click on “Markets & Sectors” on the left-hand side of the page.
- Under “Markets & Sectors,” click on “Commodities.”
- You’ll then see a list of available commodities that you can trade on Fidelity. Click on the one you want to buy.
- On the commodity’s page, you’ll see a chart of its price history and some basic information about it. Below that, you’ll see a “Trade” button. Click on that.
- In the trading panel that appears, you’ll need to specify how much of the commodity you want to buy, and at what price. You can choose to either buy at the current market price, or set a limit order to buy at a specific price in the future.
- Once you’ve entered the details of your trade, review them and then click “Preview Order.”
- On the preview screen, review your order and then click “Place Order” to execute the transaction.
- You should see a confirmation screen with the details of your trade. From there, you can monitor your position in the “Accounts & Trade” section of the Fidelity platform.
That’s it! Just remember that commodities are volatile assets, so make sure to do your research and manage your risk accordingly.
Conclusion
With our experience in the commodities market, we believe that the top commodities to invest in 2023 are those that have strong demand and supply fundamentals, as well as those that are poised to benefit from macroeconomic trends.
With the world’s focus on sustainable energy and climate change, commodities such as copper, lithium, and uranium may provide significant opportunities for investors. Additionally, agricultural commodities such as soybeans and corn may also be worth considering due to the increasing demand for food and biofuels.
As always, it is important to conduct thorough research and exercise caution when investing in commodities, as they can be volatile and subject to a range of factors that can affect their price. However, for those willing to take the risks, the potential rewards can be substantial.
