Commodity Value

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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.

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Commodity Value

  1. 1. Commodity ValueBywww.CandlestickForums.com
  2. 2. What is the value of a commodity?Commodity value is the price that thecommodity will fetch in the commoditiesmarkets.www.CandlestickForums.com
  3. 3. This market value can be predicted byuse of time honored technical analysistools such as Candlestick charting andCandlestick trading tactics.www.CandlestickForums.com
  4. 4. The factors that determine what themarket considers to be commodity valuecome from fundamental analysis ofcommodities.www.CandlestickForums.com
  5. 5. A good place to learn about commodityvalue and about successful commoditytrading is with Commodity and FuturesTraining.www.CandlestickForums.com
  6. 6. Traders buy and sell futures incommodities using Candlestick basics tohelp predict what the market will think acommodity will be worth in comingweeks, months, and years.www.CandlestickForums.com
  7. 7. The •gofficial•h economic description ofcommodity value is its •gfree marketintrinsic value under optimal useconditions.www.CandlestickForums.com
  8. 8. In buying and selling corn futures or inlive cattle commodity trading the marketwill assume that the farmer or rancherwill put his resources to •gbest use.www.CandlestickForums.com
  9. 9. h In regular terms this means that in afree market the producer will do his orher best to produce a product mostefficiently and economically.www.CandlestickForums.com
  10. 10. He or she will expect to receive more orless for his or her product based uponmarket demand, product availability, andproduct quality.www.CandlestickForums.com
  11. 11. In a free market traders will buy and sellfutures contracts on oil futures, goldfutures, interest rate futures and the likewww.CandlestickForums.com
  12. 12. with the expectation that supply anddemand will determine the spot price ofthe commodity at contract expiration.www.CandlestickForums.com
  13. 13. Commodity value is typically stated interms of a base currency such as the USdollar.www.CandlestickForums.com
  14. 14. However, as anyone who engages inForex trading knows, currencies vary invalue in relation to each other and inrelation to commodities.www.CandlestickForums.com
  15. 15. In times of high inflation the commodityvalue of things such as oil and gold go upin relation to the Dollar, Euro, or Poundwww.CandlestickForums.com
  16. 16. Sterling as traders come to expect thatholding commodities will be a moresecure means of protecting wealth thanholding fiat currencies.www.CandlestickForums.com
  17. 17. Hedging by producers and buyers ofcommodities is the basis of thecommodity market.www.CandlestickForums.com
  18. 18. By selling futures the producer willguarantee an income at a givencommodity price at a future date.www.CandlestickForums.com
  19. 19. Buyers will likewise obtain a priceguarantee of part, or all, of thecommodity they will need in comingmonths or years.www.CandlestickForums.com
  20. 20. Airlines, railroads, and shipping linescommonly buy futures to protectthemselves from the effects of inflationon the cost of fuel.www.CandlestickForums.com
  21. 21. Because commodities have an intrinsicvalue based upon supply and demandthey are most efficiently traded in freemarkets.www.CandlestickForums.com
  22. 22. When countries such as Venezuela try tocontrol the value of their currency andcommodities, black markets develop.www.CandlestickForums.com
  23. 23. These •gblack•h markets are actuallyfree markets which are only illegalbecause the country orwww.CandlestickForums.com
  24. 24. jurisdiction in question attempts toartificially control commodity value andcurrency value.www.CandlestickForums.com
  25. 25. In Poland before the fall of CommunistEastern Europe there were continualfood shortages as the governmentattempted to control food productionand prices.www.CandlestickForums.com
  26. 26. However, cut flowers were plentiful andcheap. The government did not controlproduction and the basic commodityvalue is what people paid for flowers.www.CandlestickForums.com
  27. 27. In trading commodities it is wise toremember that very basic factors willdecide what a commodity will sell for oncontract expiration date.www.CandlestickForums.com
  28. 28. This places reasonable limits oncommodities trading which the wisetrader will heed.www.CandlestickForums.com

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