This commodity is traded on a daily basis in contract increments of 5,000 barrels. Even though you are investing in the oil and gas industry, or one of the products of the industry, you theoretically would be more described as a speculator. Basically, what you are speculating on is whether or not the price for a certain commodity will move up or down. Speculating in oil and gas commodities can be a very volatile and turbulent market. As an investor, one should keep in mind that you are speculating in price movement and not the actual ownership of that commodity.
Commodity trading has an extremely high degree of risk.
Royalty Funds - Generally speaking, a royalty fund is when royalty interests are being bought, sold and held by the funds sponsors. In nearly all leasing situations, once a lease has been developed, it provides a revenue stream. In a royalty fund the objective of the fund is to generate its revenue from royalties that are held from different producing fields throughout the country. Royalty programs generally offer a low risk factor along with a relatively low return. However, their main feature is that these types of programs last for many years.