as long as the price is reasonable, u can't go wrong with commodities. however some may argue, the price that we paid for some commodities such as gold already in premium which mean that the price are at premium level. The price is far above its fair value and it will always above its fair value. Coz if the price moving below their values, there will be a large number buyers will be willing to pay for the gold to adjust the price at least to their fair value.
But what is fair value for the gold? The cost to produce 1 ounce of gold approximately around US$600 at the moment. of course miners companies or individuals need sum amount of profits, and of course you have to consider Demand of the Real Buyer who will use gold for production or consumption such as jewellers etc. You have to exclude Gold traders. Since 2008 the price of gold is driven by traders who put their money into gold as a safe heaven investment which already put the price of gold to a new record high around US$1900. If we imagine that there is no such economy downturn during 2008 until now, how much is the price of the gold should be at the moment?
My opinion the fair value of the gold at the moment should be around US$ 1.200 per troy ounce if there is no such traders. so if the price of gold around US$1.600 there is a US$300 price premium above its fair value. and as long as you trade the market premium, there is still some risks that you will loose your money. however, since the fair value of gold is always increasing from time to time, may be if you go into long position and the price going downward, may be somewhere in the future you might close your position into profit. but how long? nobody's know.
But what is fair value for the gold? The cost to produce 1 ounce of gold approximately around US$600 at the moment. of course miners companies or individuals need sum amount of profits, and of course you have to consider Demand of the Real Buyer who will use gold for production or consumption such as jewellers etc. You have to exclude Gold traders. Since 2008 the price of gold is driven by traders who put their money into gold as a safe heaven investment which already put the price of gold to a new record high around US$1900. If we imagine that there is no such economy downturn during 2008 until now, how much is the price of the gold should be at the moment?
My opinion the fair value of the gold at the moment should be around US$ 1.200 per troy ounce if there is no such traders. so if the price of gold around US$1.600 there is a US$300 price premium above its fair value. and as long as you trade the market premium, there is still some risks that you will loose your money. however, since the fair value of gold is always increasing from time to time, may be if you go into long position and the price going downward, may be somewhere in the future you might close your position into profit. but how long? nobody's know.
Everything in the world has its own rhytms