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What Are Commodities?

Commodities are physical goods or raw materials used in the production of consumer products. Commodities can include goods sold in their raw or unprocessed form (like iron ore, or crude oil), but can also encompass processed or refined products (such as refined oil products or metals). 

Commodities play a crucial role in the global economy, serving as the building blocks of many industries and providing essential goods for consumption and production.


Commodities - Periodic Table of the Elements

What is Commodity Value?

The value of a commodity refers to its economic worth. As commodities do not generate earnings or cash flows, their value is derived from a qualitative assessment of factors such as supply and demand dynamics, production costs, and perceived utility. 

The perceived utility can refer to the economic value derived from their ability to enhance the performance, durability, or aesthetic appeal of the final product in which they are used. Perceived utility can also extend to investments. Commodities are often sought after by investors focused on volatility risk, due to their historical uncorrelated performance against other asset classes.

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