In recent years, alternative investment options have gained popularity among developed market investors seeking diversification beyond traditional stocks and bonds. Among these options, commodities stand out as one of the oldest and most intriguing choices for portfolio diversification.
Understanding Commodities
Commodities are physical goods such as gold, oil, natural gas, agricultural products, and metals that can be bought and sold in standardized contracts. Unlike stocks or bonds, which represent ownership in a company or debt obligation, commodities are tangible assets.
Four Main Categories
  Agricultural Commodities: These encompass crops, livestock, and agricultural products like corn, wheat, and soybeans.
2.      Energy Commodities: Coal, oil, natural gas, and electricity fall in this category.
3.      Metals: Precious metals (gold, silver, platinum) and industrial metals (copper, aluminum) are part of this group.
4.      Soft Commodities: Goods like coffee, cocoa, sugar, and cotton fall under this classification.