Important information - Investments can go down as well as up in value, so you could get back less than you put in. The information on this page isn't advice - please ask us for investment advice if you’re not sure which investments are right for you.
Gain exposure to your chosen commodity
Commodities - like gold, silver or oil - can be used to add diversification to a portfolio of shares and funds as their value often rises when traditional asset prices are falling. There are two main ways of investing in commodities: you can buy Exchange Traded Commodities (ETCs) or buy shares in companies which mine or produce the commodity.
We believe the easiest, cheapest and most direct way to invest in a commodity is with Exchange Traded Commodities (ETCs).
What are Exchange Traded Commodities (ETCs)?
ETCs track the performance of a commodity after factoring in annual management fees. They can be bought and sold on the stock market just like a normal share, and most can even be held in an ISA. This makes them easy to buy and sell while also removing the need for arranging storage and insurance of the commodity itself – which can be costly.
There are two ways an ETC can track the price of a commodity: either physically holding the commodity or by investing in complex derivatives.
Physical ETCs are commonly used when investing in precious metals such as gold or silver, with the metal bars held securely in a vault. However, this isn’t possible for many ‘soft commodities’. Wheat, for example, would spoil if held for any length of time and the cost of storing millions of barrels of oil would be prohibitive. These ETCs will use derivatives to track performance, although they are generally only suitable for sophisticated investors.
Investing in these ETCs won’t be right for everyone. Investors should choose investments aligned with their objectives and attitude to risk. Make sure any new investment forms part of a diversified portfolio. Please take a look at the key investor information for more information on the risks before investing. If you’re not sure an investment is right for you ask for advice.
How to buy ETCs
It’s easy to buy ETCs and many other investments through Hargreaves Lansdown. They can be dealt online just like other shares, and held in the Fund and Share Account, Stocks and Shares ISA, Lifetime ISA or a SIPP. It costs a maximum of £11.95 per deal to buy and sell online and you could pay as little as £5.95 per deal if you trade frequently. More about our charges.
If you're not sure which account to invest in, find out which account is right for you.