Is It Time for Commodities?

While stocks had a very good year in 2020, many commodities also did well. The top chart highlights how commodities have performed versus the S&P 500 since 1990.

Commodities, represented by the S&P GSCI TR index, outperformed during the early 2000s as Chinese growth required significant raw materials. The end of this "super cycle" roughly coincided with the GFC in 08/09.

Since the GFC, growth moderated while stocks performed well, leading to the ratio of the GSCI to the S&P at current lows.

The second chart shows the performance of a select group of commodities along with the S&P 500 for 2020. Silver was a standout at +42.5%. Soybeans, the GSCI Soybean index, surged 32.2%. However, the virus and subsequent economic collapse contributed to a decline of 60.3% for the GSCI Crude Oil index.

Massive worldwide central bank and government fiscal measures along with a weak U.S. dollar may continue to support some commodities.