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Alex Kimani
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.
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By Alex Kimani – Dec 31, 2023, 6:00 PM CST
- The Bloomberg Commodities index has cratered nearly 10% YTD, with everything from oil and gas to base metals and grains recording declines.
- Natural gas futures have crashed 43% in the year-to-date to $2.53/MMBtu, thanks in large part to supply outpacing demand.
- Gold and Silver did better in 2023, with spot gold up 13.6% while silver has gained 1.4% YTD.
Heading into 2023, leading Wall Street prognosticators almost universally predicted plenty of pain for the U.S. stock market after 2022 turned into an annus horribilis. Indeed, many were saying that higher interest rates as well as an eventual economic downturn would tank the stock markets and compound the previous year’s losses. A few contrarian analysts, however, countered by pointing out that the pessimism was overdone and the resilience of the American economy would keep the markets afloat.
Well, it turns out the bulls were right on the money. Far from the doom and gloom that forecasters like Morgan Stanley’s Mike Wilson and JPMorgan Chase & Co.’s Marko Kolanovic had predicted, U.S. stock markets have enjoyed one of the most productive periods in recent decades.
All major stock market benchmarks are sitting at, or close to, all-time highs after enjoying epic rallies. The broad market benchmark, S&P 500, has returned 25.5% in the year-to-date, a stunning comeback after4 last year’s crash and more than double the market’s median annual gain of about 10% since 2000. The S&P 500 is now just eight points away from hitting its record closing high of 4,796.56. The same scenario has played out with the Dow Jones and the Nasdaq Composite with both indices hovering at record highs.
Unfortunately, the same cannot be said about the commodity markets. The Bloomberg Commodities Index (BCOM), a popular benchmark tracked by 23 exchange-traded contracts on physical commodities and more than $100 billion in assets, has cratered nearly 10% YTD, with everything from oil and gas to base metals and grains recording declines. Here’s a rundown of how different commodities performed in 2023.
Energy Commodities
Energy commodities recorded deep losses across the board with WTI and Brent crude oil futures the only energy contracts to post single-digit losses after falling -9.0% and -5.9%, respectively. Gasoline, heating oil, ethanol, refining spreads and Rotterdam coal all record double-digit losses due to weak demand.
Meanwhile, natural gas futures have crashed 43% in the year-to-date to $2.53/MMBtu, thanks in large part to supply outpacing demand.
Precious Metals
Precious metals have performed relatively well in the current year, a rather surprising development given that the Fed raised interest rates as recently as May 2023. Spot gold is up 13.6% while silver has gained 1.4% YTD,