A Foray Into the Commodities Market

Commodities investing is harder than you might think.

Explanation: Given the rampant inflation we're facing and the unsteadiness in the stock market, I finally decided to reallocate a portion of my portfolio into commodities. After a lot of thought, I decided to avoid ETFs and market options, and make a direct investment, avoiding any of those annoying loads and management charges the exchanges will nail you with. While oil is clearly the hot mover lately, the volatility in that market scared me away. I considered some of the precious metals, gold, silver, and the like, but in the end I think I'd be buying at the peak right now. In fact, given the current commodities bubble, it was pretty difficult to find a position that wasn't already overvalued. I researched quite a bit, though, and finally found a commodity which I believe has a lot of upward movement in its future: iron.

So, I set my strike price at about 5.6 cents an ounce and eventually found a seller willing to meet it. I bought about 4800 ounces with the stipulation that I would complete the transaction in person: you do not want to pay handling fees for a transaction like this.

Monday was the set transaction date, so I cleared my calendar and headed down to the prearranged transfer location, where my prize was loaded up for me by the seller's agents. Everything went smoothly and I was looking forward to the ease of future investments until I got home and realized that the gentlemen who loaded my car were significantly larger than I was.

After quite a bit of work, however, I managed to move my new holdings into the safety of my garage. I am quite pleased with how everything went, and I plan to hold this investment into the future through many ups and downs.

So, for those of you out there who are considering jumping into the commodities market, I suggest that you follow my lead and go out and buy iron, like I did. Just remember - moving your new 300 pound barbell set into the house will be quite a workout.