Commodity Block Currency
Categories: Trading, Company Management, Regulations, Forex
You’re a fan of the Detroit Lions. Every week, the Lions are bad. As a result, your morale is equally terrible. There is a strong correlation between your mood on Monday and the performance of the football team that should be banished and replaced by a team in London.
Well, in the commodity industry, we have something called a commodity block currency. Basically, the price of the commodity is the Detroit Lions, and the value of the currency is your mood on Monday morning.
The performance of commodity block currencies correlates strongly to the performance of hard commodities around the globe. Typically, the nation whose currency is being traded also has a significant amount of production in that commodity as a part of their GDP and global exports.
For example, the values of the Canadian “loonie” and the Russian ruble correlate strongly with the rise and fall of oil. The Peruvian sol rises and falls with shifts in global copper prices. Iron ore prices correlate strongly to the Australian dollar.
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Finance allah shmoop What are commodities This is a comm
owed And this is my monnet ease And neither of
them have anything to do with commodities though if you
say them fast enough well you'll never mind A commodity
is something that is common like it's everywhere See the
com o there for the big hand Like gold is
a commodity it's everywhere oil is a commodity it's everywhere
seven hundred fourteen page paperback copy of moby dick is
a commodity and yes we can't resist clueless politicians are
a commodity as well Well a commodity is basically the
same thing no matter where and how you buy it
That copy of moby dick is the same copy whether
you get it at your local bookstore If a physical
book stores even exist anymore or on amazon the serial
killer of those aforementioned book stores So if something is
the same everywhere well what would be the opposite Well
how about a swim lesson from michael phelps You know
you can't buy that on amazon Not yet anyway Or
say you want to be the proud owner of a
three headed dog Well you might be able to find
one somewhere but it's going to cost you a whole
lot of kibble Or what if you were looking to
buy a blouse like one that was worn by j
edgar hoover Well those are pretty uncommon and or unique
commodities Well the basic idea is that most commodities can
be sold by lots of people so their profit margins
are generally low They may sell an extreme volume but
if you have thirty people competing to sell you that
same copy of moby dick don't don't you think the
last guy just desperate to get it off his shelves
will drop the price really low and you'll take it
Yeah unfortunately then you have to read that book That 00:01:41.357 --> [endTime] book really will be your way