Baljit Group with the the focus of providing the complete gamut of financial services to all, has extended its services to commodity trading. With the rich background and experience of Baljit Group in domestic and foreign trade in metals and agro products, and food processing commodities since 1989, commodity trading was the next logical step in the ever expanding focus in financial services.
Commodity trading has been the mainstay of business activity much before the concept of ‘money’ came into existence. Its importance has been manifested in rapidly growing financial markets
Commodities as a financial instrument offers certain distinct benefits which are hard to overlook :
Diversification : Commodities as an asset class provide a good diversification opportunity for every portfolio especially because of their inverse correlation with stocks and bonds.
Stability : Commodities are relatively less susceptible to price fluctuations due to manipulations and misrepresentation of facts. This means more stability in their values.
Hedging : This is perhaps the single biggest advantage that commodity trading on the exchanges has provided. Concerned entities are now able to transfer any undue risk to another entity accruing out of price changes in a particular commodity. For example – A gold merchant /jeweller carries some stock of gold almost every day. Hence he is always vulnerable to any price decline that may take in gold. Similarly, those involved in the industry of base metals can hedge their costs against price variations of their raw material.
Leverage : It allows speculators/traders to use very high leverage owing to its low margin requirements. This translates into better ROE’s for such participants.