Home / Course / Module 4 / Oil, Silver and Other Commodities
Module 4 · Lesson 7 of 7Gold is only one corner of the commodity world. This lesson looks at oil, silver, copper and agricultural markets, what moves each of them and how they compare with gold.
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Crude oil is the most heavily traded commodity by value and a cornerstone of the global economy, because it feeds transport, industry and chemicals. The two best known benchmarks are Brent, which is a reference for much of the world's oil, and West Texas Intermediate (WTI), a US reference grade.
Key drivers of oil prices include:
Oil futures show how contract mechanics matter. In April 2020, during a sudden collapse in demand and storage fears, the front-month WTI futures contract briefly traded at a negative price. This surprised many people and showed that, with futures, expiry and storage are not abstract details.
Oil is driven mostly by physical supply and demand and by politics. Gold is driven mostly by money, rates and sentiment. Do not assume the same logic works for both.
Silver is both a precious metal and an industrial one. It has been used as money and jewellery for thousands of years, and it is also used in electronics, solar panels and other manufacturing. That dual role makes it behave partly like gold and partly like an industrial commodity such as copper.
When fear is high and investors want safe assets, silver often moves in the same direction as gold. When the economy is strong and factories are busy, industrial demand helps silver. In a slowdown, the industrial side can drag silver down even when gold is steady. Silver is also a much smaller market than gold, and its price is typically more volatile.
Traders often watch the gold to silver ratio: the price of gold divided by the price of silver, which tells you how many ounces of silver it takes to buy one ounce of gold.
Suppose (hypothetically) gold is at $2,000 and silver is at $25. The ratio is 2,000 divided by 25, which equals 80. If silver rose to $30 while gold stayed at $2,000, the ratio would fall to about 67, meaning silver had gained ground against gold. A trader who follows the ratio is not predicting direction for either metal. The ratio simply shows their relative performance. The numbers here are made up for illustration only and do not describe current prices.
For some of the logic of why gold reacts to rates and the dollar, which also affects silver, see what moves gold prices.
Copper is used in wiring, plumbing, motors and construction, so its price is closely tied to economic activity. Some analysts call it 'Dr Copper' because it is believed to reflect the health of the global economy, although the nickname is a loose rule of thumb, not a reliable forecast.
Key drivers include demand from construction and manufacturing, mine supply and disruption, and the growth outlook for large consumers such as China. Metals such as platinum and palladium are used heavily in vehicle emission systems, so they respond to the car industry, regulation and technology changes as well as investment demand.
Crops such as wheat, corn, soybeans, coffee and sugar depend on weather, planting decisions and harvest outcomes. Prices often show seasonal patterns, because supply arrives in bursts at harvest time while demand is steady all year. Government reports on crop size, trade rules, fuel prices and the cost of fertiliser also play a part.
Agricultural markets can be difficult for newcomers because the key information is specialised: weather outlooks, planting data and local conditions. Large professional participants spend a great deal of resource following it.
| Market | Main drivers | How it compares with gold |
|---|---|---|
| Oil | Production decisions, growth, inventories, geopolitics | More tied to physical supply and the economy |
| Silver | Safe-haven demand plus industrial use | Similar direction often, but more volatile |
| Copper | Construction, manufacturing, mine supply | Strongly cyclical, rises with growth |
| Crops | Weather, harvests, trade policy | Seasonal and local factors dominate |
It is tempting to apply what you know about gold to every other market. A sensible approach is the opposite: learn what drives each market before risking money in it.
Commodity markets can gap on news, and leveraged CFDs on them can lose money quickly. Trading something you do not understand is one of the most common ways beginners lose money. Practise on a demo account first.
The lesson on what are commodities covers the fundamentals again if you need a reminder, and gold trading for beginners shows how a single liquid market is a gentler place to learn.
A practical habit is to keep a short note for each market you follow: its benchmark, its main three drivers, the scheduled reports that move it and its typical daily range. Writing this down turns a vague interest into a checklist, and it quickly shows you which markets you genuinely understand and which you are only guessing at. If you cannot fill in the note, that is a sign to keep studying or practising on a demo account rather than trading it with real money.
Both attract investors seeking safe assets and both react to interest rates and the dollar, but silver also depends on industrial demand, so the link is not perfect.
Larger moves mean larger risk as well as larger opportunity, and nothing in this course recommends any particular market. Make sure you understand the drivers and size positions for the volatility.
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