Commodities: Expert Guides and Resources

One of the unique characteristics of silver among other commodities is that you can invest in it by actually buying the stuff, as you can buy gold coins and bars for investment purposes. Most dealers that sell gold generally offer silver coins and bars as well. 100-ounce silver bar: If you’re interested in something substantial, you can buy a 100-ounce silver bar.

The idea that diversification is a good strategy in portfolio allocation is the cornerstone of Modern Portfolio Theory (MPT). MPT is the brainchild of Nobel Prize–winning economist Harry Markowitz. In a paper he wrote in 1952 for his doctoral thesis, Markowitz argued that investors must look at a portfolio's overall risk/reward ratio.

Why is gold such an important commodity compared to other metals? The traits of ductility, malleability, quasi-indestructibility, and rarity can help you understand where gold derives its value: Ductility: Gold is a very ductile metal. In metallurgy, ductility measures how much a metal can be drawn out into a wire.

If you're considering investing in commodities or commodities-backed instruments, you'll want to find out as much as you can about what you're investing in. Companies have to file quarterly and annual financial reports, and they provide a wealth of information that is very valuable to the investor. The premiere location for the trade of agricultural commodities is the New York Board of Trade (NYBOT), and you'll want to become familiar with it.

One of the biggest trends in the global investment game in the beginning of the 21st century is the increasing popularity of commodities in investor portfolios. Driven by high commodity prices, many investors are looking for ways to profit in this sector. Commodity exchanges are becoming popular vehicles through which investors access the commodity markets.

Commodities are cyclical in nature. Returns on commodity investments aren’t generated in a vacuum — they’re influenced by a number of economic forces. In other words, the performance of commodities, like that of other major asset classes, is tied to general economic conditions. Because economies move in cycles, constantly alternating between expansions and recessions, commodities react according to the current economic phase.

The New York Board of Trade (NYBOT) is one of the oldest exchanges in the United States and is the premier location for the trade of agricultural commodities. The NYBOT also offers futures contracts that track cotton, ethanol, and wood pulp (pulp is used to make paper), as well as products that track several financial futures, such as the euro (the currency), the New York Stock Exchange Composite Index, and the Reuters/Jefferies CRB Index.

The Securities and Exchange Commission (SEC) requires publicly traded companies in the United States to file annual and quarterly reports. The quarterly report, known as Form 10Q, contains information about the company's financial operations during each of the first three fiscal quarters in a given year. (A company doesn't need to file a quarterly report at the end of the fiscal year, because that's when the annual report is released.

Established in 1848, the Chicago Board of Trade (CBOT) used to be the oldest commodity exchange in the world. The CBOT was the go-to exchange for grains and other agricultural products, such as oats, ethanol, and rice. The exchange also offered several metals contracts targeted at individual investors, including the mini gold and mini silver contracts.