What are commodities?

Commodities are raw products that can be grouped into standard categories (such as ore, agricultural products, or crude oil) and then traded. The key to these transactions is that the commodities under each category are exchangeable, thus failing to establish a commodity market for gemstones, as each gemstone is different. Bulk commodities are usually used to produce finished goods.

Where have you heard of commodities?

Because commodities are used at the beginning of many manufacturing processes, rising commodity prices can quickly affect the entire supply chain. Commodities are also extremely sensitive to catastrophic weather and world events. So, you may have heard in the news that a bad harvest or a flood causes the price of potatoes or coffee to rise, or that political events stimulate the price of oil and cause the price of crude oil to rise.

What you need to know about commodities...

There is a wide variety of commodities. Many will hear of gold, Brent crude oil and copper, but beyond that, commodities include wheat, sugar, natural gas, aluminum, lead, tin, nickel, zinc, iron ore and coal. Usually, commodities are traded in large quantities electronically, but due to large price fluctuations, they are not suitable for investment novices.

A relatively safe way to invest in this area is to invest in companies that produce commodities, such as silver mining companies. In addition to buying and selling in the cash market, commodities can also be traded in the form of futures contracts. Futures exchange Transactions.