The New Commodities (Exchange Traded Funds)

Recently, I opened a Commodities/Forex account at Interactive Brokers. My intension is to learn about Forex Trading, have money available to invest in gold or silver through a futures contract or other opportunities to hedge against the falling Dollar. I started paper trading Forex pairs and I’m finding it is not an easy market to trade. My make believe $100,000 account is quickly down $2,500. Just when I’m convinced a trend has started and I buy in, the trade turns against me. I obviously don’t have an edge with Forex trading, but that’s why I’m only paper trading now.

What I’m starting to appreciate is that Exchange Traded Funds offer a great way to buy into some commodities. For instance you can trade precious metals by buying gold through the Gold ETF (Symbol: GLD) or silver through the new Silver ETF (Symbol: SLV). Both of these funds are actually backed by the metals. Another fund I’m watching closely is the United States Oil Fund LP (Symbol: USO). The fund price is pegged to the price of oil (see graphic above). At some point I expect oil to go much higher and USO is a good way to play it.