- Exposure to different growth opportunities. A growing demand in a commodity can see its prices rise significantly over time. For example, iron ore prices rose by more than three times in 2008-2010 driven by huge demand in China and its supercharged economic growth.
- Diversification benefits. Commodities have historically shown a low or negative correlation with stocks ...
A commodity is a basic good that can be bought and sold. The purchase and sale of commodities is usually carried out through futures contracts on a commodities exchange.
A commodity has no or hardly any differentiation – one ounce of gold is the same as any other ounce of gold.
Examples of commodities include gold, silver, iron ore, copper, wheat, rice, coffee beans, sugar, salt, etc. Soft commodities are goods that are grown, while hard commodities are extracted from mining. Energy commodities include crude oil, coal, natural gas, electricity, etc.
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