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Commodity Value
What is the value of a commodity? Commodity value is the price that the commodity will fetch in the commodities markets. This market value can be predicted by use of time honored technical analysis tools such as Candlestick charting and Candlestick trading tactics. The factors that determine what the market considers to be commodity value come from fundamental analysis of commodities. A good place to learn about commodity value and about successful commodity trading is with Commodity and Futures Training. Traders buy and sell futures in commodities using Candlestick basics to help predict what the market will think a commodity will be worth in coming weeks, months, and years.
2. What is the value of a commodity?
Commodity value is the price that the
commodity will fetch in the commodities
markets.
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3. This market value can be predicted by
use of time honored technical analysis
tools such as Candlestick charting and
Candlestick trading tactics.
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4. The factors that determine what the
market considers to be commodity value
come from fundamental analysis of
commodities.
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5. A good place to learn about commodity
value and about successful commodity
trading is with Commodity and Futures
Training.
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6. Traders buy and sell futures in
commodities using Candlestick basics to
help predict what the market will think a
commodity will be worth in coming
weeks, months, and years.
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7. The •gofficial•h economic description of
commodity value is its •gfree market
intrinsic value under optimal use
conditions.
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8. In buying and selling corn futures or in
live cattle commodity trading the market
will assume that the farmer or rancher
will put his resources to •gbest use.
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9. h In regular terms this means that in a
free market the producer will do his or
her best to produce a product most
efficiently and economically.
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10. He or she will expect to receive more or
less for his or her product based upon
market demand, product availability, and
product quality.
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11. In a free market traders will buy and sell
futures contracts on oil futures, gold
futures, interest rate futures and the like
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12. with the expectation that supply and
demand will determine the spot price of
the commodity at contract expiration.
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13. Commodity value is typically stated in
terms of a base currency such as the US
dollar.
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14. However, as anyone who engages in
Forex trading knows, currencies vary in
value in relation to each other and in
relation to commodities.
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15. In times of high inflation the commodity
value of things such as oil and gold go up
in relation to the Dollar, Euro, or Pound
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16. Sterling as traders come to expect that
holding commodities will be a more
secure means of protecting wealth than
holding fiat currencies.
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17. Hedging by producers and buyers of
commodities is the basis of the
commodity market.
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18. By selling futures the producer will
guarantee an income at a given
commodity price at a future date.
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19. Buyers will likewise obtain a price
guarantee of part, or all, of the
commodity they will need in coming
months or years.
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20. Airlines, railroads, and shipping lines
commonly buy futures to protect
themselves from the effects of inflation
on the cost of fuel.
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21. Because commodities have an intrinsic
value based upon supply and demand
they are most efficiently traded in free
markets.
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22. When countries such as Venezuela try to
control the value of their currency and
commodities, black markets develop.
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23. These •gblack•h markets are actually
free markets which are only illegal
because the country or
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24. jurisdiction in question attempts to
artificially control commodity value and
currency value.
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25. In Poland before the fall of Communist
Eastern Europe there were continual
food shortages as the government
attempted to control food production
and prices.
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26. However, cut flowers were plentiful and
cheap. The government did not control
production and the basic commodity
value is what people paid for flowers.
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27. In trading commodities it is wise to
remember that very basic factors will
decide what a commodity will sell for on
contract expiration date.
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28. This places reasonable limits on
commodities trading which the wise
trader will heed.
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