InVestment in CoMModities: An IneVitable tRading opTion..

In recent times, a coroborative curicity pops up among traderes across the countries in commodities & their tradability. Many of them beting over these commodities as an inevitable investment option in coming days. But.. all these words are more prospective over present perspects. Lets find out what these commodities actually do mean.

Commodites can be largely termed as goods having a little distinctive aspect. What differs them from common term is their world wide avilability & acceptability along in the line of consistency with a least variation in standard & quality. Lets take few examples of commodities that are commonly in use like precious metal(gold, silver, copper etc), agricultural products such as rubber, corn, rice ,sugar etc., energy & industrial resources like crude oil, coal & aluminium etc. However their respective trading value varries in accordence with their tradability.

Now lets see how traders play in this market. Although here we deals in commodities, it doesn't necessorily mean that we need to buy or sell commodities in physical sence. Moreover, what actually do mean is to buy a future contract of an underlaying commodity at a certain price at a certain future date more like future trading in equity market. Accordingly, in the mean time the daily price of such commodity varries accordingly. the extent of these varrietions effects in fixing up future contract price. In technical term, commodity trading commonly practices in derivative tools rather than dumping up for further deal in real term.

As I have stated earlier, commodity market gradually growing up with global applosure. Now days commodities are traded accross the countries in various exchanges like Chicago Mercantile Exchange, Australian Securities Exchange, the Tokyo Commodity Exchange etc. These exchanges facilitates the platform for plotting future course of contracts. Now, unlike eqity market, valuation of a commodity depends upon several events strats from environmental to social,political & economical outlooks. For exampale, price of crops varries yearly in accordance with change in climate & it's favourability. Similarly, for crude oil the pricing depends up on economical & political stability of eastern countries as well as economic conditions of other countries. These seriees of fluctuations among commodities helps in fueling momentum in to the commodity market. Accordingly for a trader, need to predict the future contract price taking the factors like cyclical trend in supply & demand, social, economical & political aspects as well as future viability.