For many investors, one of the revelations of the last few years has been the money that can be, or could have been made, through exposure to commodities. Not just the obvious homes for money in times of stress - like gold and oil - but also commodities of a more mundane hue.

Spread betting firms offer a wide range of metals, soft commodities, energy prices, some contracts based around the spot price and some based around longer term futures prices. Most spread betters trade gold and oil, although there are occasional flurries of interest in certain soft commodities.

However, if it looks an easy way to make money, there is probably risk attached.

One of these risks in this case is the obvious one that trading commodities is essentially a professionals market. Many 'soft' commodity markets are dominated by food producers to such an extent that poor timing and random events can produce big losses for the unwary. A second risk is that most commodities are priced in US dollars, which layers in an additional dimension of currency risk.

In this latter case, some of the more popular markets tend to be self-correcting. Students of the gold price cannot fail to notice, for example, that weakness in the dollar tends to produce, other things being equal, a rise in the gold price.

Spread bets offer a way round the currency risk. Spread bets on gold and oil, for example, are denominated in sterling, so a $10 move in the gold price would generate a £10 profit or loss for someone spread betting at £1 a point. The same system applies to spread bets in other precious metals like silver and platinum.

Spread betting firms offer a wide range of metals, soft commodities, energy prices, some contracts based around the spot price and some based around longer term futures prices. Most spread betters trade gold and oil, although there are occasional flurries of interest in certain soft commodities.

This contrasts with the price of a gold or oil ETF. Take gold, for example.

Gold ETFs are typically denominated in dollars, as you would expect. But if, as a UK investor, you buy shares in a gold ETF, the brokers will work out the consideration for the deal on the basis of the sterling equivalent. So your exposure in this instance is to the sterling equivalent gold price - in other words with currency factors built in.

In precious metals, both with spread bets and ETFs, there is an advantage over physical bullion, be it in the form of coins or small bars, where not only do you pay the sterling equivalent price, but also a premium on top, supposedly for 'fabrication', but in reality to give the dealer a margin. Even in the most popular gold coins, Kruger rands for example, this can be as much as 5 per cent.

Spread bets also allow you to gain exposure for a much more modest outlay than would be possible either via purchasing the product in physical form (via gold bullion coins or bars, for example) or through the futures market.

Spread bets also allow for shorting, which is more complicated to do in ETFs and by definition cannot be done in physical bullion. You either own it or you don't.

Shorting may become a useful tool in commodity markets in the next few years, after the long bull market and vast price increases that have been seen in recent years. But it's a different discipline. As in the stock market, price drops are sharp and unpredictable, advances often slower and more methodical.

This was written for our sister website, Interactive Investor