Commodities are the hard assets that are mined, drilled, drained, picked, plucked, or cut down. They’re the base raw materials that create all of the goods used in construction, fashion, automotive, digital, and other product categories. They all have several unique properties in common. All commodities can be stored, for at least a small period of time. All commodities can be traded; though transporting them varies in difficulty. Lastly, all commodities are interchangeable and have alternatives, but substituting them may result in slight quality differences. These differences may be reduced or enhanced by refinement and other developments.
There are 3 major categories of commodities, and commodity futures bear these classifications. Agricultural products covered by futures include cocoa, coffee, concentrated juices, corn, livestock varieties, soy, sugar, and wheat. Energy futures commonly traded include coal, crude oil, electricity, ethanol, natural gas, nuclear, solar, wind. Metal futures include aluminum, copper, gold, nickel, palladium, platinum, silver, steel, and zinc.
Why should you trade commodities, and by extension commodity futures? They diversify your assets and your risk exposure. Commodities values rise in times of inflation: increased amount of money chases the same amount of raw materials, resulting in higher nominal prices for commodities. They rise with inflation. Equities are adversely affected by inflationary values. Share values are derived from company cash flow projections, which decrease when they have to pay more money for the same amount of raw materials. Commodities reduce exposure to inflationary risk; equities increase exposure to inflationary risk. The same applies to bonds, commodities, and inflation. Inflation reduces the impact of nominal returns, essentially canceling out bond returns when inflationary rates are higher than the stated bond yields. Investing partially in commodities helps protect you against some risks, but will open you to others.
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International Economic Analysis:
- Major Currency Economic Summaries
- Performance of Major Imports and Exports
- Mandates of Central Banks versus Expectations
- Performance Indexes of Major Economies
- Economically Correlated Currency Projections
- Large Funds Currency Sentiment Readings
- List of Technical Indicators to Look For
- Occasional: Foregin Exchange Technicals Markups
American Markets Analysis:
- Summaries of American Economic Structure
- Performance of Major
- Federal Reserve Mandate versus Expectations
- Performance Indexes of U.S Economy
- Economically Correlated U.S Dollar Projections
- Large Trading Fund Index Sentiment Readings
- Market Wide Earnings Versus Valuations
- Fundamental Ranking of U.S Business Sectors
- Best and Worst Future Consensus Estimates
- Occasional: Firm Fundamental Strength Report
- List of Technicals to Look for While Trading
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