Commodities are more volatile than most assets. The supply-demand dynamics of commodities are continuously changing, and sometimes very rapidly. Different commodities will have different levels of volatility, of course. Some commodities are extremely volatile. For example, natural gas has had a volatility of almost 45% in some periods, and gold has experienced movements of 20-30% per year lately. Crude oil prices fell some 50% in 2015, as a global supply glut was met with weakening demand, particularly from China. Gold is actually on the less-volatile side of the spectrum for commodities. Silver, Nickel, and crude oil tend to be on the upper end of the spectrum along with exotic metals such as platinum and palladium. Continue reading...
Opportunity cost is a fundamental concept in economics and decision-making. It refers to the potential loss of choosing one option over another and helps individuals and organizations make informed decisions by considering the potential benefits and costs of each option. Opportunity cost also plays a significant role in macroeconomics, trade, and determining the price of goods and services. Understanding opportunity cost is essential for making trade-offs, allocating resources, and achieving long-term success. Continue reading...
Discover the power of commodities in your investment portfolio! Learn how they act as a hedge against inflation and provide diversification. Explore the world of hard and soft commodities, and find out how to invest in them. Maximize your portfolio potential with this essential guide. #Investing #Commodities #PortfolioDiversification Continue reading...
Unlock the world of finance with our beginner's guide to hedging! Learn how to protect your investments like a pro, just as large corporations do. Dive into the essence of hedging, its real-life applications, and its critical role in managing financial risks. Discover how to safeguard your financial future! Continue reading...
Agricultural and mining businesses are exposed to commodity price risk, which is the possibility that the price of the commodity will change unfavorably by the time the commodity is ready to be delivered. They avoid unnecessary risk by using futures contracts, forward contracts, and possibly other derivative instruments. Commodity price risk means that an agricultural or mining business might not be able to predict the revenue that they can generate from the production or extraction of commodities. Continue reading...
Commodity indexes are also called commodity price indexes, and they are informational services which reflect the price action in a designated commodity or basket of commodities. Indexes are often tracked by mutual funds or ETFs, and these can be confused with the actual index. Indexes are computed and published by market research firms. They can serve as benchmarks against which the performance of a specific asset or an investment portfolio can be compared, or they can serve as the model that index funds seek to emulate. Continue reading...
The agricultural sector, particularly wheat production and refining, is a cornerstone of the global economy, feeding millions and underpinning a range of industries from food processing to ethanol production. In this article, we delve into an intriguing niche of the market: companies involved in the wheat theme, including producers and refiners of agricultural commodities such as ethanol, sugar, and various food services. Our focus will be on key players such as Cosan Ltd., Adecoagro S.A, Bunge Ltd., and others, examining their market positions, financial health, and future prospects. Continue reading...
Unveil the Power of Natural Gas Liquids (NGLs): Discover Types & Uses 🔥 Explore the world of NGLs, valuable components extracted from natural gas. Learn about their categorization, from condensate to LPG, and how they fuel industries from plastics to heating. 🚀 #NGLs #EnergySolutions Continue reading...
Renewable resources are reshaping the way we think about energy. Not just a buzzword, they represent the future of sustainable living. From the sun's radiant beams to the earth's geothermal warmth, these resources continually regenerate, promising an endless supply even with human consumption. As the world grapples with environmental concerns and depleting non-renewable fuels, renewables emerge as the beacon of hope. They're not just about saving the planet; they're about redefining energy for future generations. Dive into the world of renewable resources, understand their potential, and discover how they're setting the stage for a greener, more sustainable future. The transition from traditional fuels is not a mere possibility—it's an imminent reality. Continue reading...
Wealth, in the economic context, encapsulates the amassed value of assets owned by individuals, communities, corporations, or nations. It's a multifaceted concept that spans beyond just monetary value, encompassing physical and intangible assets, while accounting for liabilities. The measurement of wealth is crucial in evaluating financial health and societal well-being. Understanding the essence of wealth involves comprehending its various facets and how it's quantified and managed. Continue reading...
The Chicago Mercantile Exchange, now known as the CME group, is the largest derivatives exchange in the world, and one of the oldest. It has historically served as a major international exchange for commodities futures and options on those futures, along with the Chicago Board of Trade and the New York Mercantile Exchange, which are now part of the CME Group. The CME Group is now comprised of what used to be several futures exchanges: CME, the CBOT, and the NYMEX. Historically these markets traded in traditional commodities and their futures, and Chicago was the most likely location for such an exchange, being at the hub of the Midwest. Continue reading...
Dive into the world of futures in the stock market. Explore the significance of futures contracts, their types, and the balance between risk and reward. Learn the history and the role of traders in shaping the futures landscape. Continue reading...
Unlock the world of commodities trading! Explore its history, market dynamics, and investment strategies. Gain insights into metals, energy, livestock, agriculture, and discover how to invest through futures, stocks, ETFs, or mutual funds. Diversify and seize opportunities in this historic market. #CommoditiesTrading Continue reading...
When commodity prices rise, there is an impact on how people travel, how goods are shipped, and how people formulate their budgets. In comparing the rise of natural gas vs. oil prices, both have an impact on the consumer. For instance, when home heating prices climb, people have to decide whether or not they can afford to turn up their thermostats. Furthermore, when various goods have become more expensive because their components also cost more, people have to make difficult choices on what to buy. The price of oil affects individual spending choices as well as the budgets of corporations and governments. Continue reading...
Ever wondered how markets, the bustling arenas of commerce, truly operate? Our guide takes you on a journey through the world of markets, from their basic definition to their intricate dynamics. Discover the dance of supply and demand, the evolution from physical to digital platforms, and the myriad types of markets that exist. Whether you're a budding economist or just curious about the world of trade, this comprehensive guide offers insights into the mechanisms that drive our economies. Dive in and unlock the secrets of markets, the engines of global commerce. Continue reading...
As of 2014, global GDP was $77 trillion. The total market capitalization of all world stock markets is approximately $70 trillion, and about a fourth of that amount is the U.S. market. The U.S. economy is the largest by GDP, which for 'fiscal year' (FY) 2016 was approximately $19 trillion. The total value of notional derivatives fell to $18.1 trillion. How Many Dollars do We Have in Circulation? What is Currency in Circulation? Continue reading...
The commodity market is an international network of exchanges which trade commodity spot contracts, futures contracts, and derivatives. The largest commodities exchange in the world is the CME Group in Chicago. Futures are a large part of commodities trading, and the commodities futures market includes currency futures and swaps, index futures and single-stock futures, and other derivatives based on futures contracts. Continue reading...
The Energy Sector contains companies that are in the business of discovering, processing, or selling (or all 3) natural resources like oil, natural gas, coal, solar and wind. Oil companies dominate the sector and are the largest players. Energy stocks are also cyclical, meaning that they tend to perform better when demand for energy is high (economic expansions). Companies in the Energy sector are also very sensitive to changes in the price of the underlying natural resource, like oil. For example, as the price of oil rapidly declined in 2015, falling by 50+%, the earnings for virtually every energy company collapsed. Continue reading...
The internet is overflowing with the advice, analysis, and chest-pounding of millions of self-purported gurus and market commentary services. There are plenty of well-informed and trustworthy sources out there, too. There are literally millions of websites providing you with various kinds of financial information, advice, recommendations, opinions, rumors, get-rich-quick schemes, and “facts.” There is a short list of companies that are well-established with a reputation worthy of trust: Morningstar, Moody’s, Fidelity, Schwab, Goldman Sachs, etc. Continue reading...