🛢️ Commodities · Lesson 1 of 6 · 9 min
What Are Commodities?
🛢️ Wheat doesn't check your portfolio before it moves. In early 2022 it jumped 50% in three weeks because of a war — and everyone holding a commodity fund owned that jump without predicting a single headline. Raw materials run on weather, wars, and harvests, and they could not care less what your stocks are doing.
💡 Key idea
Raw materials. Great inflation hedge.
🧠 Why it matters
Commodities = raw materials: energy, metals, agriculture (grains), and softs (plus livestock). Historically one of the stronger inflation hedges — not a guaranteed one.
🌍 In the real world
📊 2022: Russia invades Ukraine. Oil $90 → $130. Wheat surged. Commodities outperformed.
📌 Takeaways
- Raw materials globally traded
- 4 main categories
- Inflation hedge
📖 Terms in this lesson
Commodity: A raw material traded in bulk, like oil, gold, wheat or coffee.
Futures contract: An agreement to buy or sell something at a set price on a future date.
✅ Test yourself
Best for inflation hedge?
- Cash
- Gold and energy
- Tech stocks
- Regular (non-inflation-protected) bonds
Answer: B · Gold and energy
Gold and energy commodities have historically risen when inflation eats away at cash.
What IS a commodity?
- A company share
- A raw material like oil, gold, or wheat
- A type of bond
- A bank account
Answer: B · A raw material like oil, gold, or wheat
Commodities are raw materials — oil, gold, wheat, copper — the basic building blocks of the economy.
Why does cash lose to inflation?
- Banks steal it
- Its buying power shrinks as prices rise
- It is taxed at 100%
- It does not — cash always wins
Answer: B · Its buying power shrinks as prices rise
Inflation means prices rise, so the same cash buys less over time. Hard assets help offset that.
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