Category: Commodities

Commodity market is an inflation indicator of an economy, as it shows the price index of commodities. Hence, if you are planning to invest to hedge yourself against inflation, you must consider investing in this market. Commodity market can sometimes be quite volatile, but so can be the stock market. The idea is to diversify you investment in varied products, and into the ones not similar to your existing investment. You must expand your portfolio and allocate funds to various asset classes to minimize risk and get decent returns. The Market The commodity market comprises of 48 markets from all over the globe, and trades around 96 commodities. People can trade anything from gold, silver, coal to spices, stell and orange juice. One of the biggest commodities market in the US can be found in Chicago. Size of the market may be small. But Chicago Mercantile Exchange (CME) trades in big volume  [...]

With the Oil price hitting new high of $82 per barrel last month the focus is again on the impact of dollar weakness on oil prices. Last month also saw the US dollar falling to new lows against basket of currencies. So how is that the dollar weakness causes high oil prices. Theoretically oil prices are determined by three factors: Current supply in terms of output, especially the production quota set by OPEC. Oil reserves, including what is available in U.S. refineries and what is stored at the Strategic Petroleum Reserves. Oil demand, particularly from the U.S. (as estimated by the Energy Information Agency) With the US dollar being the currency of choice in global crude oil trade, dollar devaluation creates several problems for the world oil industry. Oil producing countries receive their oil revenues in US dollars but use other currencies to buy goods and services from  [...]