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2.5 Advantages,Disadvantages of Commodities

Let us now take a look at the advantages and disadvantages Commodities Market

Advantages

  1. High Growth Potential – This is great because it is a true investment. In a true investment, you really want to have the potential to be bought and hold it so that you can get great growth down the line and increases in value exponentially.

  2. Diversification – This would be good to add in into your investment portfolio. Good hedge for bond and stock investment.

  3. It has inflation security – During inflation, goods and services prices will increase and the value of this commodities needed to produce these goods and services, would naturally rise as well.


Disadvantages

  1. Very easily manipulated – Example is that when there is a manipulation in the oil prices, it would not be a good place to be in.

  2. Huge and high volatility – This could be a result from the manipulation. If you are trading it as a short-term hold, then it will not be a good thing. As mentioned in the previous videos, it can either be in your advantage or disadvantage.

  3. Gaps – Gaps can occur in so many different markets. That is due to the fact that there isn’t as much of trading volume going through. This means that it is harder to get an exact price all the time. Also, less participants in the market leads to Gaps as well.


Let us move on to the next market.
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