Commodity Index
Categories: Regulations, Trading, Derivatives
Commodity indexes are nifty tools for economists, investors, and decision-makers in industries who deal in buying and selling stuff. Commodity indexes take things (commodities) and put them in a “basket” of goods, aggregating them together. Over time, you can see how a basket of commodities has risen or fallen by watching the commodity index rise or fall. Investors can invest in commodities indexes on the market, which change in value according to the value of the underlying commodities.
For instance, the Dow Jones AIG Commodity Index is a weighted index whose basket of goods includes metals, energy, livestock, and other agricultural goods. Almost like a game of Settlers of Catan, eh? As the value of these goods fluctuate, so does the commodity index. Just like in Catan when there are no more bricks on the board (so that nobody can build a road), shortages in goods can increase demand, and therefore value. And just like in Catan, when there are so many sheep that they’re practically free, a high supply of goods can decrease demand, and therefore value.
Of course, there are laws that artificially interfere with market values and a bunch of other complicated stuff that can affect the value of commodities, but you have the basics down. Just think of Catan. And never undervalue your wheat. Never.
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Finance: What Are Commodities?74 Views
Finance allah shmoop What are commodities This is a comm
owed And this is my monnet ease And neither of
them have anything to do with commodities though if you
say them fast enough well you'll never mind A commodity
is something that is common like it's everywhere See the
com o there for the big hand Like gold is
a commodity it's everywhere oil is a commodity it's everywhere
seven hundred fourteen page paperback copy of moby dick is
a commodity and yes we can't resist clueless politicians are
a commodity as well Well a commodity is basically the
same thing no matter where and how you buy it
That copy of moby dick is the same copy whether
you get it at your local bookstore If a physical
book stores even exist anymore or on amazon the serial
killer of those aforementioned book stores So if something is
the same everywhere well what would be the opposite Well
how about a swim lesson from michael phelps You know
you can't buy that on amazon Not yet anyway Or
say you want to be the proud owner of a
three headed dog Well you might be able to find
one somewhere but it's going to cost you a whole
lot of kibble Or what if you were looking to
buy a blouse like one that was worn by j
edgar hoover Well those are pretty uncommon and or unique
commodities Well the basic idea is that most commodities can
be sold by lots of people so their profit margins
are generally low They may sell an extreme volume but
if you have thirty people competing to sell you that
same copy of moby dick don't don't you think the
last guy just desperate to get it off his shelves
will drop the price really low and you'll take it
Yeah unfortunately then you have to read that book That 00:01:41.357 --> [endTime] book really will be your way