Commodity Online Research Team – AHMEDABAD (Commodity Online)

Since commodity trading got into India, the volumes of commodity bourses are closely inching towards the capital markets. Indians are new to commodities. But introducing Futures and Options in capital markets reduced the knowledge barrier and slowly and steadily many investors are moving to commodities from equities. Commodity Online has evaluated the following top five commodities in Indian in terms of popularity, value and volume:

Gold: One of the favorites in Indian sub continent. Addiction with Gold never ceases round the year, whether it is a household woman or a trader with substantial wealth. Gold is one single commodity Indians trust more than their spouse. And believe it or not, the yellow commodity has always been faithful to the owner – much more than many high society individuals to their spouses or dogs to their masters. India is the largest consumer of Gold. If one billion plus population of India had the capacity, they would have built their toilets in Gold. Such is the fascination for Gold that it has become the sole representative of value addition. In advisory business, Gold advisories sell the maximum. Irrespective of the return it gives, traders and investors stick to Gold.

Silver: Known as a poor cousin to Gold, the white super metal has given investors more than what Gold has given. The unprecedented rise of Silver has surprised the pundits but investors in Silver laughed all the way to the bank this year. But pure economics points out that in the last decade, the annual production of Silver has been much less than the annual consumption. Supply and demand scenario has put Silver in high pedestal for investors. The other reason being increased investment demand against the backdrop of uncertain economy and growing fears of higher inflation. In terms of utility, Silver is more precious than Gold as it is used heavily in manufacturing sector. A good conductor of electricity, silver is used to produce batteries, while the anti-bacterial properties of silver ions are often employed to make water purifiers. It is also used in the production of photovoltaic cells, the most common type of solar cells and even in Jet engines. The once famous model, Zen from Maruti stable, used a silver engine – that gave more efficiency than any other engines. Silver is suddenly the darling of investors.

Copper: The first metal man extracted from earth was more used in utensils in ancient era before ceramic and stainless steel plates were introduced. Due to its wide variety of usage, it is one of the most versatile and volatile commodities traded in the commodity exchanges. Copper is more traded by the business community to hedge their positions. More than 16 per cent of total Copper available is used for building wire followed by plumbing and heating. It is also used in automative industry, electrical, air conditioning & commercial refrigeration, electronics and various other uses. The copper usage has increased to such an extent that thirty years ago a car used about 35 pounds of copper as against 50 to 80 pounds of copper now. Imagine even a Boeing 727 airplane uses 9,000 pounds of copper.

Crude: One of the most essential commodities in today’s world. Crude ditched thousands of investors when the prices nosedived from over $147 a barrel in July 2008 to less than 34 in Jan 2009. Many investors went bankrupt and in India, many are said to have taken the extreme step of killing themselves after seeing their wealth melt like ice. Why this happened is something that OPEC, the Crude price controlling authority should answer. But the fact that speculators in tandem with OPEC made the price extraordinary and unrealistically high, was one major reason. Prices just exploded in a natural progression of demand and supply. Some earned while a majority lost their trust in Crude. Thereafter, many in India turned to Gold as a safe investment haven. But being a commodity without which the world cant move, Crude is still in the top five.

Zinc: Not everyone knows that Zinc is found everywhere in daily life, in every cell of the human body, in the earth, in the food we eat and in products we use daily whether it is vehicles appliances, or food we eat. For industry it is a corrosion resistant metal. But for a trader, it is yet another commodity used to gain wealth. According to Portugal-based International Lead and Zinc study group Zinc production declined by 44% to 166,000 tonnes in the first eight months of 2010. But its inventories piled up resulting in more than 11% drop in prices at MCX.