What Are Commodities?

Commodities trading is a sophisticated investment methodology that focuses on tangible assets like gold, silver, and crude oil rather than company shares used in stock trading. While this trading format has many similarities to stock trading asset trades are considered more econimically stable. Most nations to this day use some form of commodity to anchor their fiat currency, this is the principle reason many fund managers recommend commodities for a well balanced portfolio.

History of Commodity Exchanges

Commodity based fiat currencies and markets are believed to have their origins in Sumer dating back to 5,000 BC. They came in the form of clay tokens or clay cuniforms used to represent , for example a number of livestock to be delivered. Through this time and date dependent form of trading the Futures markets emerged. Futures trading initially developed to help agricultural producers and consumers manage price risks associated with harvesting, marketing and processing food crops. This first Futures Bull market and Bubble took place in the Dutch Golden Age, which saw tulip bulbs reach extraordinarily high over valuation which resulted in a dramatic crash resulting in a dramatic crash in 1637. This made way for the first regulated commodities exchange, the Chicago Board of Trade. The CBOT was formed in the 1864 and is currently the worlds largest and oldest regulated commodities trading platform.

Types of Commodity Futures

Phillips Equity Advisors provide investment strategies and trading advice on all Commodities currently traded and registered on regulated platforms. Commodities encompass a broad spectrum of consumable goods and materials whose price fluctuations are primarily driven by supply and demand factors. The most popular commodity futures can be broken down into several broad categories: metals, energy, grains, livestock, and food and fiber.