4 Current Commodity Tips You Need to Know About

 

Commodities are an incredibly strong investment choice. A great way to build a diverse portfolio, they lack the volatility of stocks while providing great room for financial growth.

But investing in commodities without knowing what you’re doing is a bad idea.

If you want to make this investment, you’ll need to develop an intelligent strategy. Here are some commodity tips to help you make that move.

Commodities Explained

Before you read any other commodity tips, you need to understand the concept. Commodities are structured trades around the delivery, sale, import, and export of a particular good. Popular commodities include oil, gold, and soybeans.

The most popular strategy for investing in commodities is signing a futures contract. These ensure that you will own the commodity for a set amount of time before selling it on a certain date at a specific price.

Here are a few tips for making the most out of your commodity trades in 2017.

Why ETFs Are A Good Choice

If you’re looking for an effective way to invest in commodities, one of the best ways to do it is through ETFs. ETFs, or Exchange-traded funds, can either monitor a commodity or a specific market index.

ETFs can be a great way for beginners to invest in commodities. They are easy to manage and involve a lot less red tape than a futures index. While investing in ETFs is not the only way to make a profit off of a commodity investment, it is the best way to get acquainted.

How To Use a Short Position

Many have a strong preference for the simple game of going long on their commodities. But this can be a mistake. There’s a lot of money to be made off of the short sell, and it also isn’t particularly difficult.

If you detect a market depreciation, you should sell shares in a commodity. Let the commodity depreciate in value: when you feel it has bottomed out and will experience a resurgence in value, you should buy shares.

This will allow you to minimize the cost of purchasing valuable commodities while profiting off of purchases of a commodity at a low value. Every trader should stop worrying and love the short.

Read The News (Financial and Otherwise)

Commodities are very complex. But in a way, they can also be relatively simple to understand. As a matter of fact, indexes for every commodity from corn to currency will appear in the newspaper. And not just in the business section.

Staying on top of everything from policy to boardroom rumors can help you make the right decision. So devote at least an hour to the news each day.

Be An Oil Skeptic

Oil is one of the most popular commodities. And while it can perform well or poorly in various technical analyses, an essential part of risk mitigation involves taking a look at the international political environment.

Whether it’s through long-term transformations in the energy market or instability in OPEC nations, the future for oil is questionable. In the name of risk mitigation, we would advise approaching oil with caution.

Beyond Commodity Tips: Work With Us

Tips can take you far. But you can go even further by working with seasoned financial professionals.

We’re experts in various areas of trading. One of these areas is commodities trading. But whether you’re looking to succeed at the trading of commodity ETFs or to continue boosting an already thriving portfolio, we’re the best people to work with.

Contact us to take your trading strategy to the next level.

Using Blockchain Technology Companies for Trade Finance

One of the most propitious industries for blockchain technology is trade finance. Many of the world’s largest banks are putting time into its research and development.

Thanks to a consortium of 71 global financial leaders, R3CEV, much has been uncovered about potential uses of blockchain technology.

Since 2016, R3 has executed several pilot runs in the marketplace to complement their research. They will continue to improve these strategies until ready to fully enter the market.

Block chain
Here’s the future of trade finance with blockchain technology companies.

So, what are some of their findings of potential use? Here’s the future of trade finance with blockchain technology companies.

Monitor Real-Time Status and Condition

One of R3’s members, CBA, is a leading contributor to the research of blockchain technology. Currently, they are undergoing 3 different projects to analyze blockchain use.

They are conducting a trial run with exporters who ship cotton. A humidity monitor is placed inside the canister, which is linked to IoT and GPS.

This monitor allows consumers to track their shipments with real-time status. Also, they are able to evaluate the condition of their product as it travels through.

Other national blockchain technology companies are running pilots, similar to this study. In Singapore, Hellosent is conducting similar tests. However, they’re studying the import of French wine.

Framer
A growing issue for grain farmers is a financial loss due to trade insolvencies.

Eliminate Unpaid Settlements

A growing issue for grain farmers is a financial loss due to trade insolvencies. An estimated $50 million was lost in 2014 because of this activity.

It takes roughly 4-6 weeks for a farmer to receive payment for their shipments. At that, often times conflict arises between farmers and buyers over payment complications (failing to pay the appropriate amount, late payment, etc.).

Australian start-up, Full Profile, has taken matters into their own hands.

Their blockchain platform allows farmers to now receive automatic payment upon delivery of grains. This will significantly reduce the risk of dispute between farmers and buyers.

Once Full Profile’s application is fully functional in a domestic setting, they will expand on external trade.

Digitize 

The use of blockchain technology can also be beneficial to reducing financial loss and risk. Upon further development, it will be able to digitize sales and legal arrangements.

Trade finance is an unwieldy industry, that relies heavily on settlements and contracts. Currently, most of these agreements are handled the old-fashioned way: paper copies.

Blockchain technology will remove the need for this paper-based system. This ultimately reduces the risk of financial loss as documents are often lost, mishandled, or tarnished.

Electronic documentation can be tracked much more efficiently. Also, it cuts out the need for a third-party verification system.

Interested in Learning More About Blockchain Technology Companies?

Blockchain technology creates transparency in financial trade between buyers and sellers. From the moment an order is made up until payment, blockchain is capable of simplifying the trade process.

Are you based out of India and looking to jump into the world of international trade? You’re at the right place.

At Adam Smith Associates, we aid our clients through all of their trade finance needs. Contact us to learn how we can help you!