Commodities are all about research, and careful investment. Making the right decision always means performing research, and exploring the history of that commodity, to formulate a reasonable prediction on how that commodity is likely to perform in the future.
But another point that Sam Tabar always calls attention to, is watching out for problem products. As the former Head of Asia Pacific Capital Introduction at Merrill Lynch, he definitely knows what to look for when it comes to a safer commodity investment.
Avoiding poorly managed funds is essential to establishing a reasonable return on your investment. Take the US Natural Gas Fund for example. The UNG has fallen more than 75%, creating tremendous losses for those that invested early. All because demand was too high for the fund's managing partner.
Without the proper foresight, they ran out of shares to issue. Despite an appeal to the S.E.C., that yielded approval for creation of more shares, no action has been taken by UNG.
The same nature of problem is found with the United States Oil Fund. The USO is supposed to benchmark the price of WTI light sweet crude oil. The USO's share price is more than 50% lower than recent crude oil prices. Meaning this is a no-go investment for those that want to purchase, and sell commodities with accurate and up to date pricing.
These are the types of things that you have to watch out for. Otherwise you can end up sinking a lot of money into an investment that's not being managed well. Which is why research is the name of the game when it comes to commodities.
The more research that you can do, the better. This is going to provide you with insight, and expertise into how the markets are performing consistently over time. But you will also get an idea about how the commodities are being managed. You want to focus on the commodities that are being managed well, and always avoid the minefield of mismanagement that comes with commodities investments in any nation, or with any type of commodity.