If you take physical delivery, you're literally buying it and put in your garage. Some traders believe that the ratio of gold actually able to be delivered, relative to the paper derivative contracts, is about 200 paper ounces of gold for every actual ounce of gold. And there's another real gocha hanging out there that some people have pointed out. They they could make as many of these insurance pieces of paper as people wanted,. which meant essentially the insurance paper took place of the underlying real thing.
Physical commodities are investments that you can physically own, such as gold, silver, natural gas, and oil.
Take gold, for example. The price of gold rises and falls, depending on the demand.
Demand tends to go up only when people are feeling afraid or uncertain about the future. The problem with investing in gold is that you can’t accurately predict what the demand will be at any particular time. That makes investing in gold more like gambling than like smart investing.
If you really want to learn how to invest the smart way, it takes a good amount of due diligence and patience but the long-term payoff is worth it. By following smart investment practices that have made people like Warren Buffett extremely wealthy, you may not make money fast, but you have the potential to make more of it.
Warren Buffett started with a small amount of money too, and he turned it into $30 billion. This goes to show that it isn’t about the money you have, it’s about the knowledge you have.
In this vault episode of the InvestED podcast, Phil and Danielle discuss investing in commodities, whether or not they keep up with inflation, and in what scenarios they could be a worthwhile investment despite their inherent risk.
If you want to learn how to reduce your risk while investing, check out this guide where Phil explains how to pick stocks the Rule #1 way: https://bit.ly/3fX1adE
Topics discussed in this episode:
- Valuation methods of investing
- Types of investments
- How to pick stocks
- Commodity stocks
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