Don't let volatile markets frighten you off Isas
22 Feb 2012
Commodities are basically marketable goods or services and can be very popular with investors - they can experience huge surges in value as demand for certain goods soar.
Commodities are generally split into 'hard' and 'soft' commodities. 'Hard' commodities usually denotes goods that are mined from the ground or taken from other natural resources: gold, oil, rubber, aluminum. Some of these are categorised as "defensive" because they are goods that are immune from economic ups and downs - for instance, oil is always needed by the population to heat homes. Gold and other precious metals are also commonly perceived as safe havens, because it's rarity breeds demand and any falls in value tend to be more gradual.
'Soft' commodities, by contrast, are typically grown; examples include cocoa, wheat and fruit. The value of these can be more volatile due to their short shelf life and seasonality.
