Basics of Commodities Investment

Classroom

oi-Staff

By Super

Published: Tuesday, June 26, 2012, 16:50 [IST]

“Commodities investment", the most familiar word but still unknown to many. We use commodities in our day to day life but still people find it a “grave word" when it comes to investment.

Investing into commodities is not something new, instead it has been carrying out since centuries. Investing in commodities is pretty much similar to investing in equities.

The difference between the two is obvious: equity market trades in equities, (shares of companies), and commodity market is for trading commodities like gold, silver, soya, wheat etc.

Types of commodities:

Commodities are raw materials that represents the same and standard value around the world. Before investing into commodities, it is essential to understand the types of commodities traded. There are many commodities you can trade, given below are some of the important ones:

It has been classified into 5 parts:

Energies: Energy is one of the most actively traded commodities in commodity market. Energies comprise of Crude Oil, Heating oil, Natural gas and Gasoline.

Metals: Metals are of two types: base and precious metals. Base metal comprises of aluminium, copper, zinc, lead, nickel and tin. Precious metals further include gold, silver, platinum and palladium.

Grains: Grains consist of wheat, rice, oats, corn and soyabeans.

Soft Products: The commonly traded soft products are cotton, sugar, orange juice, cocoa and coffee.

Livestock: Livestock is another type of commodity, that includes live cattle, pork bellies and lean hogs.

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