Supply of commodities is affected by the gap between the cost of production and the price at which that commodity has been trading
Commodities are different from most other financial assets. Unlike equities and bonds, they do not generate income in themselves – for example in the form of dividends or fixed income yield. In addition, there are costs associated with buying and owning commodities, such as storage costs, which conspire to generate a negative yield on investments in these assets over the medium to long term. What this means is a “buy and hold”, long-only exposure to commodities is unlikely to generate attractive returns over normal investment time horizons. Much more preferable is to take a trading app...
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