Commodity is a agricultural product or raw material that can be bought and sold. e.g., gold or sugar.
There are 2 types of commodities that are traded in the market -
1. Soft commodities : Soft commodities are agricultural products. e.g. Sugar,
Coffee, Wheat.
2. Hard commodities : Hard commodities are mined products. e.g. Silver,
Gold, Oil and Rubber.
The price of the commodity depends on the supply and demand in the market.
Commodities can be traded on the commodity exchanges i.e. you would need a Demat account to trade in commodities.
E.g. for trading in Gold, instead of buying a physical gold, you buy a gold (ETF) exchange traded fund with almost the same market value, that of gold.
Below are few benefits listed from the commodity trading -
1. It diversifies your portfolio :
For example, gold prices have shown very low correlation with most of the other assets prices and hence commodities offer an excellent means for portfolio diversification.
2. Commodities give more liquidity :
In commodity trading it is equally easy to both buy and sell futures and an investor can easily liquidate his trades whenever required.
3. Holding Actual Physical Gold :
Physical Gold is a product by which investors can take investment traded in de-materialized physical gold using the futures market. In this condition, an investor can hold physical gold, in a safe deposit vault approved by the exchange, which is reflected in the demat account.
The main features of this are:
Liquidity
Assurance of purity
Safety
Below is the list of commodities which are traded on the commodity exchange -
Foodstuff
Coffee
Sugar
Cocoa
Rice
Soybean
Wheat
Sunflower Oil
Orange Juice
Metals
Copper
Lead
Zinc
Tin
Aluminium
Nickel
Precious
Gold
Platinum
Palladium
Silver
Energy
Crude Oil
Natural Gas
There are 2 types of commodities that are traded in the market -
1. Soft commodities : Soft commodities are agricultural products. e.g. Sugar,
Coffee, Wheat.
2. Hard commodities : Hard commodities are mined products. e.g. Silver,
Gold, Oil and Rubber.
The price of the commodity depends on the supply and demand in the market.
Commodities can be traded on the commodity exchanges i.e. you would need a Demat account to trade in commodities.
E.g. for trading in Gold, instead of buying a physical gold, you buy a gold (ETF) exchange traded fund with almost the same market value, that of gold.
Below are few benefits listed from the commodity trading -
1. It diversifies your portfolio :
For example, gold prices have shown very low correlation with most of the other assets prices and hence commodities offer an excellent means for portfolio diversification.
2. Commodities give more liquidity :
In commodity trading it is equally easy to both buy and sell futures and an investor can easily liquidate his trades whenever required.
3. Holding Actual Physical Gold :
Physical Gold is a product by which investors can take investment traded in de-materialized physical gold using the futures market. In this condition, an investor can hold physical gold, in a safe deposit vault approved by the exchange, which is reflected in the demat account.
The main features of this are:
Liquidity
Assurance of purity
Safety
Below is the list of commodities which are traded on the commodity exchange -
Foodstuff
Coffee
Sugar
Cocoa
Rice
Soybean
Wheat
Sunflower Oil
Orange Juice
Metals
Copper
Lead
Zinc
Tin
Aluminium
Nickel
Precious
Gold
Platinum
Palladium
Silver
Energy
Crude Oil
Natural Gas
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