1. What Are Commodities?
Commodities are basic raw materials and agricultural products that are interchangeable and traded on global exchanges. One barrel of a given grade of oil or one ounce of pure gold is essentially the same as any other.
They form the physical building blocks of the economy — energy, metals, and food — and their prices ripple through nearly every industry.
2. Hard vs. Soft Commodities
Hard Commodities
Mined or extracted natural resources: gold, silver, oil, natural gas, copper. Tied closely to industrial demand and geopolitics.
Soft Commodities
Grown or farmed goods: wheat, corn, coffee, sugar, cotton. Heavily influenced by weather and harvests.
Investors most commonly focus on precious metals and energy, which are the most liquid and widely followed.
3. Why Gold Is a "Safe Haven"
Gold has been a store of value for thousands of years. In times of fear, inflation, or currency weakness, investors often flock to it, which is why it's called a safe-haven asset.
Key traits: Gold pays no interest or dividends, but it holds value when paper currencies weaken and often rises when stocks fall — making it a popular hedge and diversifier.
4. What Drives Oil Prices
Oil is the lifeblood of the global economy, and its price swings with the balance of supply and demand:
- •Supply: production decisions by major exporters, and geopolitical disruptions.
- •Demand: global economic growth — booms lift demand, recessions cut it.
- •The dollar: oil is priced in dollars, so a stronger dollar can pressure prices, as explained in our currency guide.
5. Commodities in a Portfolio
Commodities often move differently from stocks and bonds, which makes them useful for diversification. They can also act as an inflation hedge, since raw-material prices tend to rise when inflation does.
The trade-off: Commodities generate no income and can be highly volatile. They're typically a modest slice of a portfolio, not a core holding.
6. Tracking Commodities on WIT
WIT displays live commodity prices alongside stocks and crypto:
- Follow gold, silver, and oil in real time on the markets dashboard.
- Watch how they react to the dollar and to risk-off moves in stocks.
- Consider a small allocation as a diversifier and potential inflation hedge.