Commodities, Explained

2.

The main characteristic is pricing.

This market is totally dependent on supply and demand. Commodities have no producers on the market, all the companies looks the same and do not differ significantly. So, the price is set based on demand and market opportunities. This fact attracts a large number of speculators.

Another feature is standardization. Every commodity must have something that is common for every unit, i.e., weight, density, size and so on. That’s why some products, for example, diamonds are not commodities. The diamonds are unique, they have cut, density, size and color that are different for each gem.

These features are used in money mechanism.

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