This asset class is for investors with really long time frames in mind. The cycles here can last over several years and the returns could be manyfold. Unfortunately what goes on in Indian commodity market is nothing but gambling as bets are put for very short time frames like few hours to few days / weeks. Moreover the speculation is rampant as very high leverage is allowed in commodity trading compared to stocks. For example – you can take position of 1 Kg Gold ( approx 18/19 lac Rupees exposure ) and margin will be at the most 5 %.
Indian commodity market is not as matured or developed as stock market due to lack of presense of large global players. Hence rigging is relatively easy as few dominant domestic players will control the price movement. That is why I prefer to give levels in US $ where the trading is more transparent.
Ideally one is expected to enter the commodity when it is just starting the up-move and keep rolling the position month over month. We will provide guidance for entering, accumulating as well as exiting 6 globally traded commodities. This guidance will be given for different time frames to suit individual investor’s convenience.