Primary products: the commodities markets
“Gold, the barbarous relic.”
John F Kennedy
“Gold, part of the apparatus of conservatism.”
John Maynard Keynes
- Commodities are basic raw materials, primary products and foodstuffs that are homogeneous and generally traded on a free market. Examples include oil, gold and coffee.
- Commodity contracts may represent cash transactions for immediate delivery, or forward contracts for delivery at a specified time in the future.
- Often, contracts are exchanged without any actual transfer of the goods. This allows scope for hedging and speculation – commodities were in fact the origin of the derivatives markets.
- For investors, commodities offer the potential for exceptionally high returns but a very high degree ...