2020 saw, on average, metals up 26%, energies down 14% and the rest a touch better, up 2%, at the end of this landmark year.
Returns = Continuously compounded rates of return
Data Source: Barchart.com
The biggest gainer was silver, up 36%. The worst declines were soybeans, down 29%, and heating oil, down 26%! The commodity indexes did not fail to disappoint.
12/31/2019 = 1000
SP500 = S&P 500 Stock Index
BCOM = Bloomberg Excess Return* Commodity Index
GSCI = S&P GSCI Excess Return* Commodity Index
Data Sources: Yahoo Finance, Bloomberg.com, SPGlobal.com
While everything fell in the March COVID break, nothing fell like the energy weighted GSCI, down over 50% at the bottom. The recovery was lackluster too, with the GSCI still ending down 25% in 2020. Not even the balanced BCOM could save itself, ending down 4% in 2020. The S&P 500 outpaced them all.
Sadly, both commodity indexes are BELOW their 1990s inception levels.
This may be easily explained by technology advancing far ahead of demand. We produce too much energy, agriculture and metals, even, for prices to rise in the "long run".
Feel free to post comments.
Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.
Certain steps were not taken to insure that the energy weighted GSCI stays more relevant.
ReplyDeleteWhile driving around I took notice of new energy initiatives active in other states. Tennessee's Solar Farm, Indiana and Illinois Wind Farms.
I am sure if this index began assimilation of these new energy sources into the index the numbers wouldn't look so bad. I am pretty sure another thing to note is that people are becoming more "Carbon Conscious" and anti-idling laws exist now.
So vehicles are being engineered to turn off after about 3 min idling in commercial vehicles and 4 min in a personal vehicle. This is likely one of many sources for the decrease in demand. The price of crude dropping could indeed be linked to the corona pandemic. When I was in insurance I was told to expect a lighter claims load and an increase in severity of accidents.