Commodities

The book I read to research this post was Commodities for Dummies by Amine Bouchentouf which is an excellent book which I bought from Kindle. When trading in commodities it's not only when the price goes up that you make money. You can gamble on the price going down. You hand over a set amount of money & agree to invest it in that commodity on a set date. I am going to look at some of the commodities you can invest in. Before that I ought to mention if there is a natural in an area that produces that item, which does seem to happen a lot nowadays you may see the market fluctuate & may lose money, so don't invest more than you can afford. The number one commodity not surprisingly is oil & you can make a lot of money investing in this. A couple of things that influence crude are if it contains a lot of sulphur it limits how useful it is. An oil containing little sulphur is referred to as a sweet crude. Also if they can make a lot of products from it they call it a light crude & if it's thicker & they can't they call it a heavy crude. Both of these types are useful because they can make different products from the two types. You will hear North Sea Oil referred to as a sweet light crude. Particularly in China & the USA coal is a huge commodity. In America more than 50% of their power stations use it. China is heavily involved in steel production which requires coke which is made from coal. Steel is a commodity & China is the worlds biggest producer. An interesting story is when David Carnegie was in charge of a huge steelmaking conglomerate he used to focus on upgrading their equipment when steel prices were low & because everyone used to upgrade when prices were high he used to get it done cheaply. That's a practise many companies do today. Coffee is a huge commodity but is of course subject to the weather. Gold is a good commodity & I bet you didn't know most gold in circulation is recycled because it's very rare. Platinum is even rarer than gold & is very resistant to tarnishing. Silver used to be used a lot in photography which of course now is mostly digital but still remains popular. Zinc is used in stainless steel & is one of the most sought after metals as a result. Palladium is used in making catalytic converters for motor vehicles so I think the potential is obvious. Aluminium is the 2nd most used metal in the world behind iron. I think I've covered the major commodities but there's lots more like natural gas & even frozen pork belly which is used to make bacon.