The commodity market just like the stock market is a financial market that allows investors to buy or sell goods. In the commodity market, traders invest in raw materials or primary goods which are to be used for manufacturing other goods. Commodities can be exchanged with another security, means the buyers can buy the same product from a number of sources and vice-versa they can sell the commodity to many buyers. Most of the investors who want better profit in the commodity market take best commodity tips, gold and silver tips from an expert of the financial market in order to gain more profit.
Basically, the Commodity market is a platform where trading in commodities like gold, silver and other precious metal takes places. It is same as the stock market, the difference is instead of purchasing or selling of shares a trader buys or sells commodities.
Following are the main difference between commodities and stocks
1. The biggest difference in trading of shares and commodities is the time duration in which the two security remain on the exchange. Several stocks remain on exchanges for many years while their issuing companies still continue with their business, on the other hand, Commodities are traded in futures contracts, that means investors purchase or sell which is totally based on expected future price of the contract, in the commodity trading the buyer of a commodity promises to deliver a specific commodity to a buyer by a specified date.
2. Trading in the stock market needs a better knowledge of market analysis like fundamental analysis and technical analysis and a clear understanding of the market forces that drive the assets prices. A trader needs to identify good companies, he has to study a company’s financial condition and then decide accordingly. The commodity markets, are less dependent on humans being activities as the commodities are natural resources and they are not subject to manipulations.
3. In the commodity market, the commodity has various varieties and each variety differs from each other while In the stock market, One unit of a security does not vary from another of the same type of security in terms of their characteristics.
4. Both commodity market and stock market provide huge benefits to investors. In case of the stock market, many stocks provide quarterly dividends. The main benefit of commodities is that their price value is supported on physical possessions. Most of the times many investors are willing to buy commodities under uncertain economic conditions.
Both the market provides a better opportunity to traders to make a good income. It depends on the traders in which segments they want to invest according to their investment goals. For better results, a sebi registered investment advisor can help an investor in a right way.