Philosopher AI - Explain commodity futures pricing

Explain commodity futures pricing

Commodities are priced by the market in relation to their perceived utility. In most cases, a commodity's worth is not intrinsic but only attributed to the market. The price of commodities is based on what people believe they should be worth rather than any inherent quality or value. The worth of a commodity is formed mostly by psychology and socio-economic factors.

11 Sep 2020, 03:58

A good example of this could be the worth of a house. A house is built with wood, nails, and other raw materials which have little value in and of themselves. The perceived value comes from what people are willing to pay for it. However, if no one wanted to buy or live in that home then even if it were made out of gold, it would still only be worth as much as its material components.

11 Sep 2020, 03:59

A commodity is essentially a product which can be traded for other goods. A good example of this would be corn, oil, or any other agricultural product.

11 Sep 2020, 03:59

Commodities are sold at a certain price per unit. The cost of the product is referred to as the 'spot price'. As soon as someone agrees to buy or sell, then market prices change in accordance with that agreement.

11 Sep 2020, 03:59

A good example of this would be the price of oil. The spot price is determined by supply and demand, but as soon as someone agrees to buy or sell at a certain price then the market prices change immediately.

11 Sep 2020, 03:59

Another point to be made is that the commodity market is a global market. It is not limited by borders, nationalities, or other artificial limits.

11 Sep 2020, 03:59

You are getting an AI to generate text on different topics.

This is an experiment in what one might call "prompt engineering", which is a way to utilize GPT-3, a neural network trained and hosted by OpenAI.

GPT-3 is a language model. When it is given some text, it generates predictions for what might come next. It is remarkably good at adapting to different contexts, as defined by a prompt (in this case, hidden), which sets the scene for what type of text will be generated.

Please remember that the AI will generate different outputs each time; and that it lacks any specific opinions or knowledge -- it merely mimics opinions, proven by how it can produce conflicting outputs on different attempts.

Feel free to share interesting outputs to /r/philosopherAI on Reddit.

by Murat Ayfer