4 Books on Commodities Every Investor Should Read

4 Books on Commodities Every Investor Should Read

Reading books can help you become a better investor. Fortunately, thousands of books on finance and trading are just a click away. In this article, we will look at some of the best four books on commodities that you should read.

Hot Commodities | Jim Rogers

Hot Commodities | Jim Rogers

Jim Rogers is a respected commodities trader who regularly appears on the top financial media platforms like CNBC, Wall Street Journal, and Bloomberg. He is also a well-known financial writer who has published books on investing, commodities, China, and real estate. 

Jim Roger’s best book is known as Hot Commodities, which was published in 2004. The book starts with an explanation of the role that commodities play in the market. For example, he talks about how the quantity of some commodities is falling even as the world’s population grows. 

In the latter chapters of the book, Rogers focuses on specific commodities and identifies their characteristics and why they are good investments. He starts with crude oil, one of the most important commodities in the world. He writes about its troubled history such as the oil embargo and the 2004 oil crisis. Further, he writes about the demand and supply dynamics in the industry. 

After crude oil, he turns to gold, one of the leading precious metals. He writes about its demand and supply dynamics and the key factors that affect its pricing. Other metals he focuses on in Hot Commodities are lead, sugar, and coffee.

Hot Commodities was my first book on commodities to ever read and I would highly recommend it to anyone who is getting into the industry. Still, since the book was written in 2004, a lot of things have changed. 

For example, on crude oil, he did not anticipate the special role of electric vehicles. And on gold, he was not aware of the actions the Fed would take to confront key challenges like the 2008/9 and 2020 crisis. 

Trading Commodities and Financial Futures | George Kleinman

Trading Commodities and Financial Futures | George Kleinman

George Kleinman is an author who has written four books about commodities trading. Some of his best-known books are Learn how to trade commodities, The new commodity trading guide, Mastering commodity futures, and Trading commodities and financial futures. 

While I have read these books, the most important one for beginners is the last one. He is also the founder of Commodity Resource Corporation, a company that has offered advisory services for more than three decades.

Written in 2004, the book teaches the reader the basic concepts of trading the commodities market. It starts by teaching the reader about the four key essentials of becoming a good trader, which are patience, knowledge, guts, and health.

He then moves on to write about the futures market and what it is. He explains what futures contracts are, the concepts of leverage and margin, and the explanation of short and long hedges. He then goes on to explain the concepts of options, technical and fundamental analysis, and algorithms. 

Other concepts he covers are on trendlines, volume, open interest, the Commitment of Traders (CoT), and how to follow the trend.

While this book is intended for commodity traders, its concepts apply for all financial assets like stocks and exchange-traded funds (ETFs).

Commodity Options Pricing | Iain Clark

Trading Commodities and Financial Futures | George Kleinman

There are several ways of trading and investing in commodities. For example, you can buy commodity linked stocks, physical items, and contracts-for-difference (CFDs) that are offered by different brokers. Another way to trade commodities is using the options market.

Options is the conditional market that allows you to benefit from the overall movements of the asset. A call option gives you the right to buy an asset while a put option gives you the right to sell an asset but not the obligation. To be honest, it is a relatively complicated trading method. 

Therefore, Commodity Options Pricing, by Iain Clark is one of the best books that introduces you to the industry in an easy-to-understand way. In the first few chapters, Clark introduces the concept of commodities and their models. He then writes about products in trading like spot, forwards, and futures.

In later chapters, he writes about precious metals like gold, silver, platinum, and palladium. He also writes about base metals like copper, alumunium, and tin, energies like crude oil, natural gas, and coal, and agricultural derivatives like wheat, corn, oats, soybeans, and cotton.

This book is ideal for people who want to grasp the concepts of options and futures in the commodities industry. It is also ideal for beginners who want to learn deeper concepts about how commodities are priced.

The New Case for Gold | James Rickards

The New Case for Gold | James Rickards

James Rickards is a well-known writer, lawyer, and market commentator. He has authored several books on currencies and central banks. His best-selling book is on the currency wars that exist between different countries.

In 2016, Rickards published a small book on gold known as The New Case for Gold. For starters, gold is a precious metal that is closely-linked to the financial system. Indeed, central banks like the Federal Reserve and in China are the leading buyers of the metal. 

In this book, Rickards writes about the history of gold and its close relationship to the Federal Reserve. He then dedicates the rest of the book making the case that gold is money, insurance, constant, and resilient. 

This book is a relatively short one, going for less than 200 pages. Yet, the concept it shares will make you understand more about gold and its role in the financial market. However, unlike the books mentioned above, this book will not give you trading and investment tips.

Summary

We have barely scratched the surface since there are many books in the commodities industry. In this list, however, we have looked at some of the most important books on the sector that are ideal for both beginners and advanced investors.

Leave a Reply