During the first half of calender year 2021, commodities were the top performers

Commodities rallied 21 per cent in the first half of 2021, making them the top performing asset group ahead of U.S., European, emerging market and non-Japan Asian stocks. The broad-based index of energy, agriculture, industrial metals and precious metals rose the same amount as high-flying Bitcoin, which pulled back after hitting its all-time high of more than $63,000 on April 13.

West Texas Intermediate (WTI) crude oil was the number one performer, up nearly 52 per cent on higher-than-expected demand and tight supply, while precious metals lagged, with silver down 1 per cent and gold down more than 6 per cent.

This represents a nearly complete reversal from the price action in 2020. Last year, precious metals were winners—silver surged close to 48 per cent, gold 25 per cent—and oil was the big loser, slipping as much as 20 per cent.

But appetite for risk has changed now that huge segments of the economy are reopening. The last six months were a profitable time to invest in the oilfield. The S&P Oil & Gas Exploration & Production Select Industry Index gained approximately 65 per cent.

Bloomberg reports that U.S. oil consumption hit a new record seasonally-adjusted high during the week ended July 2.  It’s no secret gold had a rough six months, but a retrace of the bull market could be in the works due to strong fundamentals. Investors seeking a haven may need to look elsewhere than government bonds. Gold seems to be the ultimate contrarian investment right now. The metal remains extremely undervalued compared to the S&P 500.

Leave a Reply

Your email address will not be published.