How to Invest in Commodities in the UK 2025

Ruby Layram 10th Jun 2025 No Comments

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‘Commodities’ is an Umbrella term for raw materials that can be traded like stocks and shares. Examples of ‘commodities’ include gold, oil, copper, wheat and even coffee.

Some might say that commodities make the world go round. These products tend to see steady demand, no matter what the political environment looks like, which makes them a pretty steady investment.

If you fancy diversifying your portfolio with raw materials and agricultural goods, this guide will show you exactly how to invest in commodities in the UK in 2025.

Also read: How to invest in UK stocks

What Are Commodities, Anyway?

Simply put, commodities are physical goods like gold, silver, oil, gas, wheat, coffee- basically the raw materials that keep the world running. When you invest in commodities, you’re betting on their prices going up. Unlike stocks or bonds, commodities tend to move differently, so they can balance out your portfolio when markets get bumpy.

Why Invest in Commodities in 2025?

So, what makes commodities such a good investment to consider in 2025?

Inflation hedge: Prices of stuff like gold and oil often rise when inflation is high, helping protect your money.
Diversification: Commodities don’t usually move in sync with shares, so they spread out your risk.
Growing demand: Things like metals and energy are crucial for green tech and industries, which might boost prices over time.

Now that you know why commodities are worth considering, let’s get to the fun part: how to invest in them.

The Different Ways to Invest in Commodities

There are several ways that you can invest in commodities in the UK. I recommend reading through each of them and choosing the option that best aligns with your risk tolerance, long-term goals and budget.

1. Buy Physical Commodities (If You’re Brave)

Buying actual gold bars or silver coins sounds glamorous, right?

It’s a classic way to own commodities directly. But it’s not for everyone, you’ll need secure storage, and selling physical goods can be tricky. Still, if you want the “real deal” and don’t mind a bit of hassle, this is an option.

2. Invest in Commodity ETFs or ETCs

For most people, investing via ETFs (Exchange-Traded Funds) or ETCs (Exchange-Traded Commodities) is the easiest way in.

These funds track the price of a commodity (like gold or oil) but trade on the stock market like shares. You can buy and sell them through your regular ISA or SIPP, making it tax-efficient and straightforward.

Popular examples include the iShares Physical Gold ETC or WisdomTree Brent Crude Oil ETF.

3. Commodity Futures (Advanced and Risky)

If you’re feeling adventurous and want to trade contracts agreeing to buy or sell commodities at a future date, futures trading is for you. This is a more complex, high-risk area and not recommended for beginners. You usually need a specialist broker, and prices can swing wildly.

4. Invest in Commodity Stocks

You can also invest indirectly by buying shares in companies that mine metals, drill for oil, or farm agricultural products. This way, you get commodity exposure plus potential dividends, but company risks come into play.

What About Taxes?

In the UK, profits from selling commodities or ETFs can be subject to Capital Gains Tax, but you get an annual tax-free allowance (£6,000 for 2024/25). Investing through ISAs or pensions shields you from tax, so using these accounts for commodity ETFs is smart.

Read: The best stocks and shares ISAs in 2025

How to Buy Commodities ETFs

ETFs are one of the best ways to invest in commodities without needing to worry about picking individual stocks and shares.

Here’s a step-by-step overview of how to do it!

Choose a platform: Find an investment platform with low fees and a low minimum deposit. Some of the best options include Invest Engine, Interactive Investor and XTB.
Choose an ETF: I recommend doing a bit of research to find an ETF with a low expense ratio (cheaper!) and a solid track record.
Deposit funds: Fund your investment account with the amount that you would like to invest.
Buy the ETF: Execute a ‘market order’ to buy the ETF.

Investing in commodities in the UK in 2025 doesn’t have to be scary or complicated. Whether you prefer owning shiny gold, trading ETFs, or buying commodity stocks, there’s a way for everyone. Just remember to keep it balanced, watch your fees, and think long term.

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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. Companies listed above are not necessarily endorsed by Money Magpie. When investing your capital is at risk.