The commodities market in India is a growing market which allows people to enter different metals and agricultural commodities. These markets are linked to the international commodity prices as a result of which the commodity markets are working for 24 hours just like the currency markets.
When it comes to investing in metals, there are two most popular metals when it comes to trading turnover; copper and gold. Let us understand how to invest in these two.
How to invest in copper:
It is possible to invest in copper through futures. Copper futures investing allows people to enter the metal trade. India turned net importer of copper in the year 2019 which has made the country vulnerable to prices in the international market. Traders and companies can take positions in this metal on the futures market.
Copper futures are listed on MCX. The prices for the same change everyday depending on the international prices. The minimum lot for copper investing is per kilogram. The price quoted on MCX is price per kilogram. For copper futures investing, you need to create a separate trading account. This commodities trading account can help you invest in any commodity listed on MCX and NCDEX, the two commodity exchanges in the country.
Copper futures come in 1 month, 2 month and 3-month expiry contracts. A trader can purchase futures expiring in a month and settle the same before expiry. The trader can roll forward the settlement to the next month if he feels a higher chance of earnings as well.
How to invest in gold:
When it comes to investing in this yellow metal, there are different modes and ways to make the investment. Gold offers a potential to earn from the price difference over a long term and a short term. However, like all commodity investments, this too is subject to market fluctuations and global conditions which may pull the prices in either direction.
1. Physical gold:
It is possible to invest in physical gold over the counter from jewellers and from financial institutions like banks. This gold can be in the form of jewellery or in the form of biscuits or coins. This is sold based on grams and at the rate prevailing in the market.
2. Gold ETF:
A gold exchange traded fund is a mutual fund that makes its investments in gold. It tracks the value of gold and has provided a reasonable rate of return in the past.
3. Sovereign gold bonds:
This scheme is administered by RBI. In this scheme, electronic gold is sold by the RBI at current market rates with a maturity period of 8 years. The scheme provides a 2.5% interest rate yearly and capital gains exemption to individuals.
4. Gold futures:
Gold futures India provide a means for people to trade in gold. The gold futures price mimics the price of the metal in the spot market. The gold futures can be purchased from either MCX or NCDEX through a commodities trading account. The open position can be closed by taking an opposite position with the same expiry date to cash in profits.