How Gold, Silver and Crude Oil performed this week? Here are ways to invest in them

Is your portfolio focused only on shares and bonds? If yes, it’s time to diversify your portfolio by adding commodities. Commodities is a separate asset class. Investing in commodities like gold offers a safer edge during economic uncertainties and protects against inflation. Besides that, commodities provide good opportunities when stock market moves downside. Usually there is an opposite correlation upto some degree between commodities and stock market.

In recent past we have seen some good movement in commodity market. It has even outperformed stock market at times when there was a big movement in prices of bullion and energy products. Returns in these commodities during past one year has been quite good with lifetime high in prices in some of them.

Performance of Gold, Silver and Crude Oil

• Gold

Gold has always been a precious commodity that holds immense value in an Indian household. An investment made in 10 grams of gold five years ago has given more than 100% returns to its investors. This is a significant return as it outperforms most of the other investment classes. In the past one year, when all the major economies of the world were struggling due to the pandemic of coronavirus, the performance of gold has been on the rise. We have seen the gold touching a lifetime high of Rs. 56,191, thereby creating an opportunity of wealth creation.

Performance of Gold this week

 

Source: ibjarates.com

• Silver

Similar to gold, investment in silver has also provided a good opportunity. It has shown tremendous growth during past one year. We can see this on a one-year graph where it touched a high of Rs. 77,949 and almost got doubled from its 52 weeks bottom. If we see five years performance of silver, it has given around 100% return.

Performance of Silver this week

Source: ibjarates.com

• Crude Oil

Crude oil has also emerged as an attractive commodity—the price of crude oil influences the economies around the world. If you see the performance of crude oil, it has made a high of Rs. 4,967 offering more than 500% return from its lows in last one year.

Performance of Crude Oil this week

Source: mcx.com

How to Invest in Gold, Silver and Crude Oil?

Investors willing to enter the commodity market can do so in several ways. Here are some of them:

• Investing in the physical form

You can buy commodities like gold and silver in the physical form of bars or coins. You can purchase a specific quantity at a set price and resell it later. However, it is essential to note that the physical form of investment has additional issues related to security, purity, storage cost, etc.

• Investing through Commodity Futures

An effective way of investing in the commodity market is through a Futures contract. It allows you to buy or sell a commodity at a predetermined price on a specific date, as mentioned in the contract. It is ideal for investors having higher risk tolerance and should be used primarily for hedging or trading purpose.

• Investing through Exchange Traded Funds (ETF)

Investing in the commodity market through ETFs is also a great option. It provides you an exposure to the prices of commodities and also an opportunity to trade an ETF at an exchange on real time basis just like a stock. It’s a digital form of investment in gold.

• Investing through mutual funds

Another structured way of participating in the commodity market is through professionally managed mutual funds. Just like ETF, mutual funds offer you exposure to the commodity market while avoiding the hassles involved in physical form of gold investment. Compared to an ETF, a mutual fund scheme in gold may be a diversified scheme with investment across different asset classes. A mutual fund scheme does not provide real time trading at an exchange.

Apart from the investment channels mentioned above, you may also invest in stocks of companies that directly or indirectly deal with the commodity you wish to add to your investment portfolio. For investing in stocks, you will need a trading and demat account.

Commodities have the potential to provide good returns and also offer the advantage of portfolio diversification.

Disclaimer : ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103), MCX (Member Code no. 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.