Betfair Official Blog

Market Jargon Buster 1

In the first of a new weekly series, commodities simplified...

Tradefair currently offer markets on four commodities. But what are these funny things, and more importantly, how can you make money on them? If this wasn't the internet, but rather a tube station, you would currently be standing under a deluge of signs saying, 'ANSWERS THIS WAY.'

Which would lead you here. A commodity is anything for which there is demand, but which is supplied without qualitative differentiation across a given mark. Characteristic of commodities is that their prices are determined as a function of their market as a whole.
Here are the Tradefair commodities;

Gold:
What? Good old Au. Quite useful because with gold comes money. The high price of gold is due to its rare amount as only three parts out of every billion (0.000000003) in the Earth's crust is gold.

When? Tradefair offer a daily market on the Gold Future price as determined by NYMEX (the New York Mercantile Exchange). The market is suspended at 5:30 daily.

Why? As a general principle, the price of gold will do the opposite of whatever the good old Dollar is up to. In times of recession, a weak dollar will see the price of gold rise, as investors will be reluctant to plough money into the stock-market. As the economy begins to improve however, folks want dollars again. So the decision as to buy or sell, depends on how you think the American economy will look a couple of months down the line. Good luck.

Where? Here

Oil - Brent Crude:
What? North Sea oil - the commodity that ensures Scotland isn't solely reliant on our tax money to prevent its people starving. More often than not, it will end up in your car.

When? Tradefair offer a daily market on the Light Sweet Crude Oil price as declared on the ICI. The market is suspended at 6:30 each evening.

Why? If you think the North Sea remains full of oil, you'd probably be best off selling. If on the other hand, you think the only thing present right now in Scottish waters is the Loch Ness Monster, supply will fall, hence as all good and even some mediocre economists will tell you, the price will rise.

Where? Here

Oil - US Crude:
What? The American version of the above.

When? Tradefair offer a daily market in the price of US Light Sweet Crude Oil Futures as declared by the clever clogs at NYMEX. This market also suspends at 6:30 nightly.

Why? As above, the prices are largely dictated by supply & demand, although one must take a more global view of things in this instance.

Where? Here

Silver:
What? Not just the poor man's gold, silver plays a vital role in all sorts of day-to-day stuff., such as jewellery, dentistry (for your fillings you sweet-munching monkey), and in medication (the wealthy wouldn't be seen dead swallowing penicillin.)

When? Tradefair offer a daily market on the NIMEX settlement of silver futures. The market closes at 5:25 each night.

Why? War is good for nothing apparently. Not true - the more weapons being built, the greater the need for silver. If you're planning to start a global conflict, get on the price of silver before you do. You might lose the war and die, but at least your inheritors will be wealthy.

Where? Here