From the course: Understanding Capital Markets
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Commodity markets basics
- [Instructor] Another type of investment that can provide diversification value for your portfolio is commodities. Commodities include a variety of physical products. They're usually raw materials and they're bought and sold through exchanges. The major commodities include agricultural products like corn, wheat, soybeans, hogs, cattle, etc., metals and energy. Metals include silver, gold, copper, among others. And energy includes crude oil, any other petroleum products, natural gas, electricity, things like that. Commodities trading encompasses both trading on what's called spot markets which means buying goods for delivery today and futures trading which means buying the goods for delivery at a specified time in the future. Because of the cost of storing commodities for delivery in the future, usually futures prices are higher than spot prices. Someone's got to pay to store that commodity for you until it's time to…
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