Steven Zoernack: A Commodities Primer

1. Steven Zoernack: A Commodities
Primer

2. As a leading asset manager,
Steven Zoernack possesses a great deal of
experience and understanding in
commodities markets. For many, the financial
markets remain a mystery, and commodity
futures trading may seem particularly
confusing.

3. Question: What are commodities?
Steven Zoernack: Commodities are raw
products that come from the earth. For
instance, corn, coffee, precious metals, oil,
and cattle are all commodities.

4. Question: How do commodities markets work?
Steven Zoernack: For the most part, commodity
traders speculate on the future value of a product.
For instance, gold traders may buy “ownership” in
gold at today’s price in hopes that the value will rise
over time. While people can buy gold and take
physical possession of it , they can also purchase
gold as a “future.” In this case, the trader does not
“take delivery” of the physical product. Instead, he or
she trades the commodity at a set price and then
hopes to sell it at a predetermined future date at a
higher price in order to make a profit.

5. Question: How does one enter the
commodities market?
Steven Zoernack: You gain access to the
commodities market through your broker, just
as you would with securities. Many mutual
funds also feature commodity investments as
part of the fund.

6. Question: Are commodities a risky
investment?
Steven Zoernack: Futures contracts are
usually highly leveraged, and in the hands of
an inexperienced trader, they can constitute a
great risk. In times of financial market
volatility, precious metal commodities may be
a good investment if you time your entry into
the market correctly. The best way to mitigate
risk is to work with an adviser and learn all
the aspects of commodity trading before you
enter the market.

7. Question: Are commodities a risky
investment?
Steven Zoernack: Futures contracts are
usually highly leveraged, and in the hands of
an inexperienced trader, they can constitute a
great risk. In times of financial market
volatility, precious metal commodities may be
a good investment if you time your entry into
the market correctly. The best way to mitigate
risk is to work with an adviser and learn all
the aspects of commodity trading before you
enter the market.