Commodities

A commodity is a raw material or primary good that can be bought and sold, typically as an input to the production of other goods or services. What distinguishes a commodity from any other product is fungibility: one unit is interchangeable with another unit of the same grade and type. A barrel of…

The spot price of a commodity is the price for immediate delivery — or, more precisely, for settlement within the standard short timeframe for that market (often two business days). If you want to buy oil, gold, or wheat today at today's market price, you are transacting at the spot price.

Investing in commodity futures generates returns from three distinct sources, and understanding the distinction matters enormously for realistic expectations.

Crude oil is the single most traded commodity in the world by value, and arguably the most important price in the global economy. It is a feedstock for transport fuels, plastics, chemicals, fertilisers, and hundreds of manufactured products. When oil prices spike, the effects ripple through…

The shift away from fossil fuels toward renewable energy — solar, wind, battery storage, and green hydrogen — is the most consequential structural change in commodity markets since the original industrialisation of the twentieth century. Where the twentieth century was the age of oil, the…

Oil occupies a unique position among commodities: it is simultaneously a commodity with its own supply and demand dynamics and a macroeconomic variable that influences the entire economy. The historical record of the relationship between oil prices and recessions is striking.

Gold is unlike any other commodity. It is barely consumed: almost all the gold ever mined in human history still exists in some form above ground. While a barrel of oil is burned, a tonne of copper becomes part of a building's wiring, and wheat is eaten, gold is hoarded — melted down, re-refined…

Copper has earned the nickname "Dr Copper" — the metal with a PhD in economics — because of its reputation as a reliable leading indicator of global economic health. Unlike gold, which is driven by financial and monetary factors, or oil, which is subject to geopolitical supply management, copper's…

Silver occupies an unusual and intellectually interesting position in the commodity universe. Unlike gold — which is almost entirely a monetary and store-of-value asset with negligible industrial consumption relative to its total stock — and unlike copper — which is almost entirely industrial —…

Agricultural commodities underpin the global food supply. While financial markets focus heavily on oil, gold, and copper, grains and soft commodities are arguably the most fundamental of all — humans cannot substitute away from food. For the two to three billion people in the world who spend a…

Commodity indices exist to solve a practical problem: how do you invest in commodities as an asset class without taking delivery of physical oil barrels, gold bullion, or grain? The answer is a diversified portfolio of commodity futures contracts, rebalanced according to a defined methodology. A…

The modern institutional case for commodities as a strategic portfolio allocation was largely built on one paper: "Facts and Fantasies About Commodity Futures" by Gary Gorton (Wharton School, University of Pennsylvania) and K. Geert Rouwenhorst (Yale School of Management), published in 2006 by the…