Commodities are the basic building blocks of the global economy. They are natural resources traded on dedicated exchanges around the world.
There are two types of commodity – soft and hard. Soft commodities are typically agricultural like wheat or sugar, whereas hard commodities are metals or energies like silver and gas. Commodities are traded on a number of exchanges that specialise in particular markets.
Commodities are also generally traded as futures contracts. These are simply agreements to trade an asset at an agreed price and date in the future. This enables you to trade the contracts themselves without ever having to own the underlying asset.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations.