What are commodities?
Commodities are physical goods that are traded on financial markets. They are typically raw materials or agricultural products that are used in the production of other goods or as inputs into other industries. Examples of commodities include oil, gold, silver, wheat, corn and coffee.
Investing in commodities can provide diversification and a hedge against inflation, as the prices of commodities tend to be influenced by different factors than stocks and bonds are. However, commodities are also subject to supply and demand dynamics, and their prices can be volatile.
Types of commodities
There are four main types of commodities that you can invest in, including:
Agricultural commodities
Energy commodities
Industrial metals
Precious metals