Difference between commodities and other asset classes
The major difference between commodities and financial asset classes like stocks and bonds are that commodities unlike stocks and bonds are physical assets that can be bought, sold and used for something. On the other hand, a stock or bond is simply a piece of paper representing a claim on future cash flow and cannot actually be used or consumed. Commodities also have “real value” in the sense that their value can never go down to zero. (e.g. The price of wheat, soybeans, gold, crude oil, etc can fall but never go to zero) In contrast, stocks and bonds issued by a company can become worthless if the company goes bankrupt for whatever reason. Commodities, however, do experience pronounced seasonality in price and volatility unlike financial assets.