A commodity Index tracks the price of various types of commodities. A commodity index can track the price of commodities in the spot market or in the futures market. A commodity index is traded like any other indices and allows investors to invest in commodities without purchasing or storing the commodity itself. A commodity index can be grouped into subcategories such as energy, metals, agriculture, livestock, etc.

Reader Questions

Difference between a stock or commodity broker and a stock or commodity trader?

A Trader is someone who buys/sells stocks or commodities. A Broker is one who helps the trader in his buying/selling

When the price of both substitute and compliment of a commodity rise, what will be the demand for that commodity?

There wouldnt be a great demand for the commodity as, lower ther the prices, more the demand of the commodity.
Remember, Demand for a product increases when the prices of its complements decrease

Why is index cards called index?

Because they are commonly used to make indexes for topics. ie. You would use "index" cards to make an alphabetical index of all the books you've read, guys you've date, etc.

Recommended Resources On Commodity Index

Asset Allocation: Balancing Financial Risk
By Roger C. Gibson

Barron's finance & investment handbook
By John Downes, Jordan Elliot Goodman

Commodity trading advisors: risk, performance analysis, and selection
By Greg N. Gregoriou, Vassilios Karavas, François-Serge Lhabitant, Fabrice Rouah

Commodity Investing: Maximizing Returns Through Fundamental Analysis
By Adam Dunsby, John Eckstein, Jess Gaspar, Sarah Mulholland

Getting started in futures
By Todd Lofton

Useful Links

http://www.investorglossary.com/commodity-index.htm
http://wiki.answers.com/Q/Special:Search&search=Commodity%20Index&limitn=old&src=ansTT
http://www.investopedia.com/terms/c/commodityindices.asp

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