Commodities

Understanding Commodities

1

Commodities are basic materials that are used in commerce, which can be interchangeable with a product of the same type. Examples include grains, gold, meat, oil and natural gas. 

2

Commodities are typically used as inputs in the production process of other goods or products. Precious metals, such as gold, are used as store-of-value investments, helping investors to avoid inflation.

3

The quality of commodities can differ slightly, though they have to meet a certain standard to be traded on an exchange. Investors can buy and sell commodities directly or by using derivatives.

4

Technological advances have led to the development of new commodities. It is now possible to trade things like internet bandwidth or smart phone minutes  across commodity markets.

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