Understanding Risk and Return in Commodities Investment

Commodities investment can offer unique opportunities and risks compared to traditional equity or fixed income investments. Understanding the relationship between risk and return in commodities is essential for making informed investment decisions.

In recent years, gold has drawn significant investor attention, particularly during periods of economic uncertainty. On the other hand, agricultural commodities can be more volatile due to factors like weather conditions, crop yields, and global demand changes.

Discuss the risk and return characteristics of investing in commodities, using examples such as gold and agricultural commodities. What factors contribute to the risks involved, and how might these risks impact potential returns in the long run?