14

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 ...

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