A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investing in commodities. Commodity markets can include physical trading and derivatives trading using spot prices, forwards, futures, and options on futures. Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management.
Normal backwardation, also sometimes called backwardation, is the market condition where the price of a commodity's forward or futures contract is trading below the expected spot price at contract maturity. The resulting futures or forward curve would typically be downward sloping, since contracts for further dates would typically trade at even lower prices. In practice, the expected future spot price is unknown, and the term "backwardation" may refer to "positive basis", which occurs when the current spot price exceeds the price of the future.
In finance, a futures contract is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset transacted is usually a commodity or financial instrument. The predetermined price of the contract is known as the forward price or delivery price. The specified time in the future when delivery and payment occur is known as the delivery date. Because it derives its value from the value of the underlying asset, a futures contract is a derivative.
The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place in the Battery Park City section of Manhattan, New York City.
In finance, cornering the market consists of obtaining sufficient control of a particular stock, commodity, or other asset in an attempt to manipulate the market price.
Prudential Financial, Inc. is an American Fortune Global 500 and Fortune 500 company whose subsidiaries provide insurance, retirement planning, investment management, and other products and services to both retail and institutional customers throughout the United States and in over 40 other countries. In 2019, Prudential was the largest insurance provider in the United States with $815.1 billion in total assets.
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets. Compared to other precious metals used for investment, gold has been the most effective safe haven across a number of countries.
Bache & Company was a securities firm that provided stock brokerage and investment banking services. The firm, which was founded in 1879, was based in New York, New York.
Silver may be used as an investment like other precious metals. It has been regarded as a form of money and store of value for more than 4,000 years, although it lost its role as legal tender in developed countries when the use of the silver standard came to an end in 1935. Some countries mint bullion and collector coins, however, such as the American Silver Eagle with nominal face values. In 2009, the main demand for silver was for: industrial applications (40%), jewellery, bullion coins and exchange-traded products. In 2011, the global silver reserves amounted to 530,000 tonnes.
Nelson Bunker Hunt was an American oil company executive. He was a billionaire whose fortune collapsed after he and his brothers William Herbert and Lamar tried to corner the world market in silver but were prevented by government intervention. He was also a thoroughbred horse breeder and a major sponsor of the John Birch Society.
Pakistan Mercantile Exchange Limited is Pakistan's first futures commodity market having its registered Head office in Karachi, Sindh. It is the only company in Pakistan to provide a centralized and regulated place for commodity futures trading and is regulated by Securities and Exchange Commission of Pakistan (SECP). It has started full trading activities on 11 May 2007.
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances with respect to the price of, or market for, a product, security or commodity.
A bucket shop is a business that allows gambling based on the prices of stocks or commodities. A 1906 U.S. Supreme Court ruling defined a bucket shop as "an establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in".
The 2000s commodities boom or the commodities super cycle was the rise of many physical commodity prices during the early 21st century (2000–2014), following the Great Commodities Depression of the 1980s and 1990s. The boom was largely due to the rising demand from emerging markets such as the BRIC countries, particularly China during the period from 1992 to 2013, as well as the result of concerns over long-term supply availability. There was a sharp down-turn in prices during 2008 and early 2009 as a result of the credit crunch and European debt crisis, but prices began to rise as demand recovered from late 2009 to mid-2010.
Platinum as an investment is often compared in financial history to gold and silver, which were both known to be used as money in ancient civilizations. Experts posit that platinum is about 15–20 times scarcer than gold and approximately 60–100 times scarcer than silver, on the basis of annual mine production. Since 2014, platinum prices have fallen lower than gold. Approximately 75% of global platinum is mined in South Africa.
The Sumitomo copper affair refers to a metal trading scandal in 1996 involving Yasuo Hamanaka, the chief copper trader of the Japanese trading house Sumitomo Corporation (Sumitomo). The scandal involves unauthorized trading over a 10-year period by Hamanaka, which led Sumitomo to announce US$1.8 billion in related losses in 1996 when Hamanaka's trading was discovered, and more related losses subsequently. The scandal also involved Hamanaka's attempts to corner the entire world's copper market through LME Copper futures contracts on the London Metal Exchange (LME).
Wachovia Securities was the trade name of Wachovia's retail brokerage and institutional capital markets and investment banking subsidiaries. Following Wachovia's merger with Wells Fargo and Company on December 31, 2008, the retail brokerage became Wells Fargo Advisors on May 1, 2009 and the institutional capital markets and investment banking group became Wells Fargo Securities on July 6, 2009.
Prudential Securities, formerly known as Prudential Securities Incorporated (PSI), was an American financial services arm of the insurer, Prudential Financial. In 2003, Prudential Securities was merged into Wachovia Securities, a division of Wachovia Bank.
Andrew Maguire is a British commodities trader and whistleblower. He presented evidence to United States regulators alleging that fraud had been committed, and that prices in the international gold and silver markets had been manipulated. No regulatory or legal action has been taken as a result of his accusations.
The London bullion market is a wholesale over-the-counter market for the trading of gold, silver, platinum and palladium. Trading is conducted amongst members of the London Bullion Market Association (LBMA), tightly overseen by the Bank of England. Most of the members are major international banks or bullion dealers and refiners.
