Commodity Brokers: the best for investing in commodities

Are you considering investing in commodities and wondering which are the best brokers for commodities? In this guide, you will find all the information you need to understand how to trade these assets and who to turn to to invest securely.

Raw materials or commodities are useful instruments for diversifying your portfolio, as their performance is often independent of the geopolitical situations affecting traditional markets. Remember that, as with all investments, there is always a risk. Therefore, before investing, you need to understand the basics of how they work and discover the best platforms for trading commodities.

Commodities, unlike shares, are real assets that refer to metals, minerals, agricultural and food products. Here are the most well-known ones: gold, silver, wheat, soya, coffee, natural gas, oil, etc.

They are divided into two types:

• Soft commodities: raw materials that are grown or reared
• Hard commodities: raw materials extracted from the ground or obtained through specific refining processes

When we speak of a commodity broker, we are referring to a trading platform that offers instruments through which you can invest in these products. Let's go into detail.

As real assets, you can buy commodities on the spot markets, obtaining immediate delivery of the goods, which you will need to hold in a warehouse. On the stock exchange, however, commodities are not traded physically, but through the futures market. These are contracts that replicate the value of an asset at a specific future date and at a price set at the time of trading, and which can be exchanged between traders. This determines the price, which can vary based on supply and demand.

You can invest in futures using certain financial instruments offered by the best trading brokers:

• ETF (Exchange Traded Fund): consists of purchasing an index fund that tracks the performance of an asset, composed, in this case, of a certain number of commodities. The performance of the latter will determine the value of the fund itself
• ETN (Exchange Traded Notes): debt securities issued by banks or financial institutions that track the performance of an asset. Unlike ETFs, which track various securities, ETNs can track the performance of a single product, such as the price of gold or silver
• ETC (Exchange Traded Commodities): financial instruments issued by an issuing company to track the performance of a single raw material, such as gold, oil or gas
• CFD (Contract For Difference): contracts issued by a broker that track the performance of the underlying price. Through CFDs, you can open a buy (long) or sell (short) position, investing whether there is an upward trend or a market downturn

Finally, you also have the option to invest in shares of companies related to commodities, such as companies specialising in extraction, refining or distribution. The variation in the price of raw materials will have a direct impact on the share price of these companies.

But how do you choose the best commodity broker? We have analysed several authorised and reliable platforms, using the following parameters as a reference:

• Type of trading
• Number of available commodities
• Commissions
• Types of platforms offered

Accessibility for beginner, experienced and advanced traders

We have therefore drawn up a ranking of 4 trading platforms that can be considered among the top performing for investing in commodities. Below you will find the reviews with their main features.