How to buy commodities for beginners in 2024

Use this guide to learn about commodity investing and follow a step-by-step guide on how to buy commodities online.
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Updated: Jan 8, 2024
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This page explains how to buy commodities online in 2024. Learn about the different commodity investing methods, what impacts their prices, and why they might be a good addition to your portfolio.

What are commodities?

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Commodities are tangible assets, natural resources, or agricultural products that are used in human activity. Many are naturally occurring such as gold, oil, and coffee, while some are processed goods such as orange juice and chemicals. Commodities impact the global economy and have a broad range of uses including food production, energy, and transport. 

They are popular among both long term investors and short term traders and are fungible assets, which means they are freely interchangeable. An ounce of gold mined in Australia is worth the same as an ounce of gold mined in Brazil for example.  

Compare the best platforms to buy commodities

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If you’re looking to buy or trade commodities, the first thing you’ll need to do is register with an online broker. Listed below, our experts have selected some of the top-rated platforms offering easy access to a whole range of commodities. Simply click the links to register in a few minutes. 

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1
Min. Deposit
9 €
Best offer
User Score
9.9
Up to $240 bonus!
Award-winning trading platform
Regulated and trusted broker worldwide
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Wire Transfer
Full Regulations:
CySEC, FCA

51% of retail CFD accounts lose money. Your capital is at risk.

2
Min. Deposit
100 €
Best offer
User Score
9.9
Trade +2000 CFDs on Shares, Forex, Indices, Crypto, Options, Commodities & more
Unlimited risk-free Demo Account
0 commissions & attractive spreads
Start Trading
Payment Methods:
Bank Transfer, Debit Card, PayPal, Credit Card, Visa, Mastercard, American Express, Trustly, Apple Pay, Google Pay, Discover, Bank Transfer: SEPA, Bank Transfer: FPS, skrill
Full Regulations:
ASIC, FCA, FSA, MAS, CySEC #250/14

CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

3
Min. Deposit
0 €
Best offer
User Score
9.2
World's biggest online bullion market
High-security vaults based Zurich, London, Toronto, Singapore and New York
Next-day withdrawals
Start Trading
Payment Methods:
Full Regulations:

How to invest in commodities online – a step-by-step guide

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Investing in commodities is a simple process. Before you begin, you’ll need to register with a trusted online broker to access the commodity market. Follow the steps below to learn how to invest in commodities online in 2024.

Step 1. Open a commodity investment account

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Choose an online broker that offers a way to invest in the commodities market. We recommend eToro   as the best commodities investing platform. You can buy range of commodity stocks, commodity ETFs, and commodity mutual funds. You can also use a broker to buy physical commodities like gold bars, platinum bars, and palladium bars

If you’re interested in specific commodity investments then a specialised broker may be the best option for you. Use our guides to find the best gold brokers, best silver brokers, best oil brokers, best platinum brokers, best palladium brokers, or the best copper brokers. 

Step 2. Choose your commodities investment vehicle

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You can invest in commodities using various methods. Most investors prefer to invest in commodity stocks, ETFs, or funds. You can also directly invest in commodities through futures contracts or even physical bars or coins. Our guide below explains more about each option. 

Step 3. Make your commodity investment

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Once you decide how you plan to buy commodities online, it’s time to make your investment. To do this, simply log into your online brokerage account and use the search bar to find your chosen investment. For example, if you’re planning to invest in a commodities ETF, just type its name or ticker symbol and you’ll be taken to its trading page. 

Fill out your order details on the trading page and hit the buy button. You’ll usually be able to decide how many shares you want to buy if using stocks, ETFs, or funds. Alternatively, you can enter a dollar amount and the brokerage platform will take care of the rest. 

Step 4. Monitor your investments

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Regularly review your investment portfolio and its performance. Keep an eye on the commodity’s price to stay updated with the latest changes. If its price drops, you could use it as an opportunity to add to your investment. If it rises, you may want to consider taking some profit. 

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What commodities can I buy?

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There are different kinds of commodities and all of them are available to buy, but only precious metals are a realistic option to physically purchase for investment. 

Commodities generally fall into two categories; hard and soft. Hard commodities include assets that are mined from the earth like gold and silver, while soft commodities are grown and harvested including wheat and corn. Below, we’ve listed the main commodity asset classes and explained what they include. 

How can I buy commodities?

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Rather than buying physical commodities, buying commodity stocks or ETFs are the most common ways to invest. Investing in commodities offers a more practical approach for most people. There are a lot of ways in which you can invest in commodities and below we’ve highlighted the main ones. 

Buy commodity stocks 

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One of the easiest ways to invest in commodities is by buying individual stocks that have exposure to a particular industry. For example, rather than investing directly in the oil market, you could purchase shares in well-known companies such as BP or Shell. 

It’s possible to gain exposure to a range of commodities through individual stocks including, gold, silver, and agricultural businesses. Along with the best commodity stocks, we have guides for several specific commodity markets which you can find below. 

Buy commodity ETFs

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For long term investors wanting to get exposure to a certain commodity, ETFs offer the easiest way forward. Exchange-traded funds are funds that track the performance of a particular sector or industry. 

ETFs work in a similar way to individual stocks, in that investors can buy shares in the fund. It is possible to invest in ETFs covering a broad range of commodities including, gold, oil, and agriculture. You can find the best Best Commodity ETFs 2024 in our dedicated guide, or click the links below for specific commodity exchange traded funds. 

Invest in commodity mutual funds

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Similar to ETFs, mutual funds allow investors to buy shares in them. However, their main difference is that a professional fund manager has control over what the fund buys and sells. Mutual funds cover a wide range of sectors and industries and invest mainly in individual stocks. 

Cheap commodities to buy

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Commodities vary in price due to a number of factors and some are considerably cheaper than others. For example, the difference in price between one ounce of gold and silver is vast. Below we’ve listed a handful of cheap commodities to help get you started investing. 

Silver 

Precious metals are one of the best ways to diversify your portfolio while also acting as a hedge against inflation. Two of the most common metals are gold and silver. Gold is considerably more expensive than silver. Silver has a range of uses including in jewellery, electronic components, and medical products. Learning how to invest in silver could prove to be a profitable decision over the long term. 

Copper 

Another cheap commodity is copper. Like silver, it is a metal and gives investors portfolio diversification and a hedge against inflation. Copper isn’t classed as a precious metal but is known as a base metal. It has multiple uses including water pipes but is predominantly used in electrical wiring. It’s one of the most imported commodities by China making it an in-demand asset. Investing in copper is an easy way to access a cheap commodity.

Cotton 

Cotton is one of the most versatile and widely used agricultural commodities and is very cheap in comparison to other assets in the agricultural sector. Investors in cotton also have the added benefit of correlated price movements with oil. As oil is much more expensive, if you invest in cotton you’ll gain exposure to two markets for as cheap as possible. Like all commodities, cotton offers an easy way to diversify a portfolio, while protecting against inflation. 

How does the commodity market work?

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The commodity market functions similarly to other commodity markets. However, not all commodities move in the same way and each sector has several unique features that make it independent. Below are some of the key factors at play.

  • Weather conditions. Weather can impact all commodities to some extent, although it is agricultural commodities that are most likely to be affected by changes in weather. Poor harvests, atoms, droughts, and diseases can have dramatic impacts on the price of commodities, especially agricultural ones. 
  • Geopolitical events. Governments around the world can be unpredictable and andy geopolitical issues can result in price fluctuations in the commodity market. Wars, trade sanctions, and more can quickly impact the market. 
  • Market cycles. Commodity prices tend to be cyclical, which means they can be easier to predict. Many commodities have a natural ebb and flow pattern in the way their prices move. 
  • Supply and demand. Like all markets, the biggest driver of commodity prices is the principle of supply and demand. Many factors impact the supply and demand of commodities, including production levels, consumption, and even geopolitical events. 
  • Exchanges. Commodities are traded on several exchanges where buyers and sellers transact. The price of a specific commodity may be slightly different between exchanges. The main commodity exchanges are the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), Intercontinental Exchange (ICE), London Metal Exchange (LME), Tokyo Commodity Exchange (TOCOM), and New York Mercantile Exchange (NYMEX)
  • Hedging. The commodity market is often used for hedging purposes. Producers of commodities may use futures contracts to protect against future price fluctuations, resulting in stability for their business practices. 
  • Speculators and investors. Retail investors and traders can impact commodity prices. This is especially the case for short-term movements, where speculators provide liquidity to the market and impact near-term price dynamics. 

Is it safe to buy commodities?

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The commodity market in general is safe to invest in, although for newcomers, there are some risks to be aware of. There are a lot of external factors that can impact the price of a commodity and it is not uncommon for sudden price fluctuations to occur. It is important to take a well balanced view before investing in commodities. 

One of the benefits of buying commodities online is the various ways you can get involved. You can directly and indirectly invest in commodities. Indirectly investing is sometimes easier, especially for beginners, as you can buy stocks or ETFs. You’ll also benefit from regulatory protection, as these types of markets are required to adhere to strict rules. 

How much does it cost to buy commodities online?

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The costs associated with investing in commodities will vary depending on the investment method you choose, although it is relatively inexpensive. 

When buying commodity stocks, ETFs, mutual funds, futures, or CFDs, you may be charged a commission, typically between $5 – $10. You may also need to pay a bid-ask spread, approximately 5 – 10% of your total transaction value. 

Additionally, you could have a management fee if investing in mutual funds which will vary depending on the fund provider’s fee schedule but is usually around 1% of your investment. Often, the cheapest way to invest in commodities is through buying stocks using a commission-free trading platform. 

Bottom line

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Buying commodities is a good choice if you’re a long term investor, looking to diversify your portfolio, or want to own a tangible asset. There are lots of options when it comes to investing in commodities in 2024 and there’s an investment vehicle for everyone. 

Long term investors may consider commodity mutual funds, commodity stocks, or even buying physical assets like gold bullion, bars, or coins. If you want to buy commodities for the short term, sticking to CFDs, futures, and options is the best choice. 

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Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.