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Investing for Dummies, 4th UK Edition by Tony Levene

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Chapter 11

Conquering Commodities and Getting into Gold

In This Chapter

arrow Understanding the commodities basics

arrow Getting into the mindset of a commodity investor

arrow Considering types of commodities

arrow Investing in different ways

arrow Avoiding the scam brokers

In the beginning, there were commodities. Thousands of years before stocks, shares or currency markets, our distant ancestors were involved in commodities – raw materials like grains, cotton and gold. It’s in the Bible – the need to store the surplus from abundant harvests to help people tide over during the bad years. And, amazingly, seven good years followed by seven lean years remains a workable concept for understanding commodity investment. Many up-and-down cycles of around seven years exist. Why? Because farmers take time to adjust to supply and demand.

All this matters to investors. For starters, the price of a commodity such as oil can have a big effect on some companies and on the economy at large. Investors in food manufacturers ...

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