Commodities

There are extensive markets that facilitate trading in primary commodities. These may be markets for investment commodities, such as precious metals (there has always been a substantial market in gold), or markets devoted to consumption products such as agricultural goods, oil products, or base metals. Sometimes the distinction is unclear; silver prices are related not merely to demand for silver as a precious metal, but also to the demand for silver as an industrial product.

A distinction is sometimes made between 'soft' commodities, such as foodstuffs and textiles, and 'hard' commodities, such as metals.

Many modern financial market features, such as the evolution of futures contracts, have their origins in the trading of commodities. The scope of commodity markets has broadened in recent years, and products have evolved which have returns linked to electricity, weather, and even pollution.