Commodities For Dummies 2nd Ed.

Introduction
About This Book
Conventions Used in This Book
Foolish Assumptions
How This Book Is Organized
Part I: Commodities: Just the Facts
Part II: Getting Started with Types of Investment Vehicles
Part III: The Power House: How to Make Money in Energy
Part IV: Pedal to the Metal: Investing in Metals
Part V: Going Down to the Farm: Trading Agricultural Products
Part VI: The Part of Tens
Icons Used in This Book
Where to Go from Here
Part I: Commodities: Just the Facts
Chapter 1: Investors, Start Your Engines! An Overview of Commodities
Defining Commodities and Their Investment Characteristics
Going for a Spin: Choosing the Right Investment Vehicle
The futures markets
The equity markets
Managed funds
Physical commodity purchases
Checking Out What’s on the Menu
Energy
Metals
Agricultural products
Chapter 2: Earn, Baby, Earn! Why You Should Invest in Commodities
You Can’t Argue with Success
Why the 21st Century Is the Century of Commodities
Ka-boom! Capitalizing on the global population explosion
Brick by brick: Profiting from urbanization
Full steam ahead! Benefiting from industrialization
What Makes Commodities Unique
Gaining from inelasticity
Finding a safe haven
Hedging against inflation
Taking time to bring new sources online
Sell in May and go away? Definitely nay!
Time to Get Down to Business: Commodities and the Business Cycle
Chapter 3: Investing in Commodities: Only for the Brave?
Biting Off More Than You Can Chew: The Pitfalls of Using Leverage
Watch Your Step: Understanding the Real Risks behind Commodities
Sovereign government risk
Geopolitical risk
Speculative risk
Corporate governance risk
Tracking Commodities and the 2008 Global Financial Crisis
Origins of the crisis
Overview of the crisis
Managing Risk
Due diligence: Just do it
Diversify, diversify, diversify
Chapter 4: Feel the Love: Welcoming Commodities into Your Portfolio
The Color of Money: Taking Control of Your Financial Life
Looking Ahead: Creating a Financial Road Map
Figuring out your net worth
Identifying your tax bracket
Determining your appetite for risk
Making Room in Your Portfolio for Commodities
Fully Exposed: The Top Ways to Get Exposure to Commodities
Looking toward the future with commodity futures
Funding your account with commodity funds
You’re in good company: Investing in commodity companies
Part II: Getting Started with Types of Investment Vehicles
Chapter 5: Benefiting from Exchange-Traded Funds
Getting to Know ETFs
Accessing a Variety of Commodity Markets through ETFs
Taking a Look at Leveraged ETFs
Chapter 6: Track and Trade: Investing through Commodity Indexes
Checking Out Commodity Indexes
Why indexes are useful
How to make money by using an index
From Head to Toe: Uncovering the Anatomy of a Commodity Index
Cataloguing the Five Major Indexes
The S&P Goldman Sachs Commodity Index
Reuters/Jefferies Commodity Research Bureau Index
Dow Jones–AIG Commodity Index
Rogers International Commodities Index
Deutsche Bank Liquid Commodity Index
Determining Which Index to Use
Chapter 7: Show Me the Money! Choosing the Right Manager
Mutually Beneficial: Investing in Commodity Mutual Funds
Riddle me this, riddle me that: Asking the right questions
Taking a look at what’s out there
Mastering MLPs
The ABCs of MLPs
Cash flow is king
The nuts and bolts of MLP investing
Heads up! Risk and MLPs
Relying on a Commodity Trading Advisor
Jumping into a Commodity Pool
Chapter 8: Exploring Commodity Exchanges, Brokers, and Trading Accounts
Why Do We Have Commodities Exchanges, Anyway?
Identifying the Major Commodity Exchanges
Ready, Set, Invest: Opening an Account and Placing Orders
Choosing the right account
Placing orders
Tracking your order from start to finish
Keeping up at the exchange
Owning a Piece of an Exchange
Chapter 9: Back to the Future: Getting a Grip on Futures and Options
Taking the Mystery out of Futures and Options
The Future Looks Bright: How to Trade Futures Contracts
The competition: Who trades futures?
Contract specs: Keeping track of all the moving pieces
For a Few Dollars Less: Trading Futures on Margin
Taking a Pulse: Figuring Out Where the Futures Market Is Heading
Contango: It takes two to tango
Backwardation: One step forward, two steps back
Keeping Your Options Open: Trading with Options
Following options in action
Understanding trader talk
Selecting option characteristics
Part III: The Power House: How to Make Money in Energy
Chapter 10: It’s a Crude, Crude World: Investing in Crude Oil
Seeing the Crude Realities
No need for a reservation: Examining global reserve estimates
Staying busy and productive: Looking at production figures
It’s a demanding field: Checking out demand figures
Going in and out: Eyeing imports and exports
Going Up the Crude Chain
Making Big Bucks with Big Oil
Oil companies: Lubricated and firing on all cylinders
Get your passport ready: Investing overseas
Chapter 11: Welcome to Gas Vegas, Baby! Trading Natural Gas
What’s the Use? Looking at Natural Gas Applications
Calling all captains of industry: Industrial uses of natural gas
If you can’t stand the heat, get out of the kitchen! Natural gas in
your home
Going commercial: Natural gas’s commercial uses
Truly electrifying! Generating electricity with natural gas
Getting from here to there: Natural gas and transportation
Liquefied Natural Gas: Getting Liquid Without Getting Wet
Investing in Natural Gas
Natural selection: Trading nat gas futures
Nat gas companies: The natural choice
Chapter 12: Keeping It Natural: Investing in Renewable Energy
Always Brand Spanking New: Getting to Know Renewable Energy
Sunny Delight: Investing in Solar Energy
Fast and Furious: Trading in Wind Energy
Betting on Biomass
Chapter 13: Fuel for Thought: Looking at Alternative Energy Sources
Digging Up New Energy Sources
Reexamining King Coal: Not As Scary As You Think
Coal hard facts
Paint it black
It’s a coal investment
Investing in Nuclear Power: Going Nuclear without Going Ballistic
Uranium equities
Uranium ETF
Uranium futures
You’ve Been Zapped! Trading Electricity
Brushing up on current affairs
Investing in the power industry
Chapter 14: Totally Energized: Investing in Energy Companies
Bull’s-Eye! Profiting from Oil Exploration and Production
Going offshore
Staying on dry land
Servicing the oil fields
Oh My, You’re So Refined! Investing in Refineries
Becoming an Oil Shipping Magnate
Swimming in oil: Transportation supply and demand
Crude oil ships ahoy!
Masters of the sea: Petroleum shipping companies
Swimming with sharks: Avoiding industry risk
Part IV: Pedal to the Metal: Investing in Metals
Chapter 15: All That Glitters: Investing in Gold, Silver, and Platinum
Going for the Gold
Getting to know the gold standard
Good as gold: Finding ways to invest in gold
Get the Tableware Ready: Investing in Silver
Checking out the big picture on the silver screen
Getting a sliver of silver in your portfolio
Bling Bling: Investing in Platinum
Gathering platinum facts and figures
Going platinum
Chapter 16: Metals That Prove Their Mettle: Steel, Aluminum, and Copper
Building a Portfolio That’s As Strong As Steel
Steely facts
Investing in steel companies
Aluminum: Illuminating the Details
Just the aluminum facts
Aluminum futures
Aluminum companies
Paying a Visit to Dr. Copper
Quick copper facts
Copper futures contracts
Copper companies
Chapter 17: Weighing Investments in Heavy and Not-So-Heavy Metals
Palladium: Metal for the New Millennium
Zinc and Grow Rich
You Won’t Get Nickel and Dimed by Investing in Nickel
Chapter 18: Mine Your Own Business: Unearthing the Top Mining Companies
Considering Diversified Mining Companies
BHP Billiton
Rio Tinto
Anglo-American
Checking Out Specialized Mining Companies
Newmont Mining: Gold
Silver Wheaton: Silver
Freeport McMoRan: Copper
Alcoa: Aluminum
Arcelor-Mittal: Steel
Making Money during the Mining Merger Mania
Part V: Going Down to the Farm: Trading Agricultural Products
Chapter 19: Breakfast of Champions: Profiting from Coffee, Cocoa, Sugar, and
Orange Juice
Giving Your Portfolio a Buzz by Investing in Coffee
Coffee: It’s time for your big break
The coffee futures contract: It may be your cup of tea
Ordering up investments in gourmet coffee shops
Warming Up to Cocoa
Investing in Sugar: Such a Sweet Move!
Orange Juice: Refreshingly Good for Your Bottom Line
Chapter 20: How to Gain from Grains: Trading Corn, Wheat, and Soybeans
Field of Dreams: Investing in Corn
Welcome to the Bread Basket: Investing in Wheat
It’s Not Just Peanuts: Trading Soybeans
Soybeans
Soybean oil
Soybean meal
Chapter 21: Alive and Kicking! Making Money Trading Livestock
Holy Cow! Investing in Cattle
Live cattle
Feeder cattle
Lean and Mean: Checking Out Lean Hogs
You Want Bacon with That? Trading Frozen Pork Bellies
Part VI: The Part of Tens
Chapter 22: Ten or So Investing Resources You Can’t Do Without
The Wall Street Journal
Bloomberg
Commodities-Investors.com
Nightly Business Report
Morningstar
Yahoo! Finance
Commodity Futures Trading Commission
The Energy Information Administration
Stocks and Commodities Magazine
Oil & Gas Journal
National Futures Association
Chapter 23: Top Ten Market Indicators You Should Monitor
Consumer Price Index
EIA Inventory Reports
Federal Funds Rate
Gross Domestic Product
London Gold Fix
Nonfarm Payrolls
Purchasing Managers Index
Reuters/Jefferies CRB Index
U.S. Dollar
WTI Crude Oil
Chapter 24: Top Ten Commodity ETFs
PowerShares DB Commodity Index
iPath DJ-UBS Commodity Index
United States Oil
United States Natural Gas
SPDR Gold Shares
iShares Silver Trust
iPath DJ-UBS Aluminum TR Sub-Index
PowerShares DB Agriculture Long Index
iPath DJ-UBS Coffee TR Subindex
Market Vectors Global Alternative Energy
Chapter 25: Top Ten Investment Vehicles for Commodities
Futures Commission Merchant
Commodity Trading Advisor
Commodity Pool Operator
Integrated Commodity Companies
Specialized Commodity Companies
Master Limited Partnerships
Exchange Traded Funds
Commodity Mutual Funds
Commodity Indexes
Emerging Market Funds
Glossary
Cheat Sheet