Commodities & Real Assets
Stocks and bonds are paper claims; a barrel of oil is a barrel of oil. Learn the one market family where the asset has a storage cost, a delivery date, and a convenience yield — and where "just buy and hold" quietly leaks money every single month.
The markets where you can take delivery of a physical thing — barrels, bushels, and bars. How commodity futures actually work, the cost-of-carry that prices them (storage plus financing minus convenience yield), why curves sit in contango or backwardation, the roll yield that makes or breaks a passive long, seasonality, commodity indices, gold as a monetary asset, the structure of the oil market, and why real assets are the classic inflation hedge. Worked numbers, curve diagrams, a roll-yield ladder, a seasonality sweep, and an inflation-shock chart throughout.
Every other market you have studied trades a claim: a share is a slice of a company, a bond is a promise of future cash, a currency is a unit of account. Commodities are different — the asset is a physical thing that has to be dug up, grown, pumped, stored, insured, shipped, and eventually delivered. That single fact — that the underlying is real and bulky — reshapes everything about how these markets price, behave, and reward (or punish) the people in them.
Because you can’t squeeze a year’s worth of crude oil into a brokerage account, almost all commodity exposure runs through futures — the binding forward contracts you met earlier, now wearing a hard hat. And futures on a storable physical good obey their own gravity: the cost of carry. A barrel for delivery next year must, by no-arbitrage, cost roughly today’s barrel plus the financing and storage to keep it that long — minus a mysterious benefit called the convenience yield that comes from actually holding the physical stuff when it is scarce. Get that balance wrong in either direction and an arbitrageur eats your lunch.
You’ll learn:
- Commodity futures in practice — contract specs, hedgers versus speculators, physical delivery, the basis, and why most longs never intend to take a single barrel.
- Storage & convenience yield — the full cost-of-carry formula, why storable and non-storable commodities behave differently, and how convenience yield flips a curve.
- Contango, backwardation & roll yield — the shape of the futures curve, and the roll that quietly makes or loses money for a passive long every month.
- Seasonality & commodity indices — calendar patterns in gas, fuel and grain, and how index products (GSCI, BCOM) bundle spot, roll, and collateral into one total return.
- Gold & the oil market — gold as a monetary, non-yielding store of value, and the real plumbing of crude: benchmarks, OPEC, the supply curve, and refining spreads.
- Real assets & inflation — why commodities, gold, real estate and inflation-linked bonds defend purchasing power when cash and nominal bonds get gutted.
Finish this and commodities stop looking like a chaotic casino of weather and war headlines and start looking like what they are: a disciplined market governed by storage, delivery, and the iron arithmetic of carry — with a unique job to do in a portfolio that stocks and bonds simply can’t.
In this topic
- 1 Commodity Futures in Practice: Contracts, Hedgers & Delivery How commodity exposure actually trades — standardized futures contracts, hedgers vs speculators, physical delivery vs offset, the basis and its convergence at expiry, and why almost no long ever takes a barrel. 18 min
- 2 Storage, Carry & Convenience Yield: What Prices a Commodity Forward The cost-of-carry that prices a commodity future — financing plus storage minus convenience yield — why storable and non-storable commodities differ, how cash-and-carry arbitrage enforces the bound, and why convenience yield flips a curve into backwardation. 20 min
- 3 Roll Yield & Commodity Indices: Why Buy-and-Hold Leaks Money Why a passive commodity long must roll its futures, how roll yield bleeds in contango and pays in backwardation, and how commodity indices (S&P GSCI, Bloomberg Commodity) bundle spot return, roll yield and collateral into one total return. 20 min
- 4 Seasonality & Supply Shocks: When the Calendar and the Weather Move Prices Why commodity prices follow the calendar — winter gas, summer gasoline, harvest grain — how inventories buffer the swings, and why inelastic short-run supply and demand turn small shocks into huge price moves. 18 min
- 5 Gold & the Oil Market: A Monetary Metal and the World's Most Important Commodity Gold as a non-yielding monetary store of value tied to real interest rates, and the real structure of the oil market — Brent vs WTI benchmarks, OPEC and the supply curve, and the refining crack spread. 20 min
- 6 Real Assets & Inflation: Defending Purchasing Power in a Portfolio Why real assets — commodities, gold, real estate and inflation-linked bonds — protect purchasing power when cash and nominal bonds get gutted, what inflation beta means, and how to size commodities in a portfolio against their roll-cost and volatility. 19 min
- 7 Final Exam: Commodities & Real Assets A graded, one-shot final exam across the whole Commodities & Real Assets course — commodity futures and delivery, cost of carry, roll yield and indices, seasonality and supply shocks, gold and oil, and real assets as an inflation hedge. 25 min
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