Commodities & Precious Metals

Introduction

Commodities are raw materials — energy, metals, and agricultural products. Precious metals like gold and silver are a special category often used as a store of value. This lesson explains these assets.

What Are Commodities?

Commodities are basic goods used to produce other products:

• Energy — oil, natural gas, coal
• Metals — gold, silver, copper, aluminum
• Agriculture — wheat, corn, coffee, livestock

Gold as a Store of Value

Gold has long been seen as a store of value and an inflation hedge. When inflation rises or markets get rocky, investors often turn to gold.

• No default risk (it's not debt)
• Not income-generating on its own
• Price driven by sentiment, inflation, and geopolitics

Why Prices Move

Commodity prices are driven mainly by supply and demand, plus geopolitics:

• Wars and sanctions can spike oil prices
• Poor harvests raise food prices
• Strong demand raises industrial metal prices

How to Invest

Investing in commodities is harder than stocks:

• Futures — direct but complex and leveraged
• ETFs that track commodities — simpler
• Mining/energy stocks — indirect exposure
• Physical metals (gold bars/coins) — direct but storage costs

Risk Profile

Commodities are often volatile and cyclical. Used sparingly, they can diversify a portfolio and hedge against inflation.

Summary

• Commodities are raw materials (energy, metals, agriculture)
• Gold is a store of value and inflation hedge
• Prices are driven by supply, demand, and geopolitics
• Invest via futures, ETFs, mining stocks, or physical metals
• Volatile — use as a modest diversifier, not a core holding

Next Lesson

Real estate and how to invest in it — including REITs.