2014 Commodities Halftime Report: Commodities Roar Back
Frank Holmes | Jul 14, 2014 04:50PM ET
What a difference six months can make. After a disappointing 2013, the commodities market came roaring back full throttle, outperforming the S&P 500 Index by more than 4 percentage points and U.S. 10-Year Treasury bonds by more than 6.
Leading the rally was nickel, delivering a 37.14 percent return, followed by palladium (17.70 percent) and gold (10.90 percent). Nickel also saw the largest gain from last year, climbing more than 55 points to settle close to $19,000 per metric tonne. Gold jumped 38 percentage points to $1,327 an ounce, and palladium rose 16 points to $843 an ounce.
At the back of the herd lagged lead, copper and wheat, which was the best performer only two short years ago.
Below you can see the 2014 halftime edition of our periodic table of commodity returns, which has proven to be a perennial favorite among our investors.
U.S. Energy Information Administration (EIA) forecasts that 2015 will represent the highest level of West Texas Intermediate (WTI) crude production since 1972. Global consumption of oil, driven largely by China once again, is expected to reach 94 million barrels a day (bbl/d) by the end of next year.
Global Resources Fund (PSPFX) portfolio manager Brian Hicks reiterates these points on why we are bullish in light of the current domestic oil production boom: Within our portfolio, we are investing heavily in the shales through upstream oil and gas companies, oil services companies and equipment companies.
Shale is transformational; it is really changing the energy landscape. Almost overnight, companies are developing resources that are long-lived and repeatable. Remember, only five years ago we were talking about peak oil. Now, we're producing roughly 8.4 million bbl/d. That's the highest we've seen since the mid-'80s. It is a trend that is going to continue.
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Even though the commodities market has so far exceeded everyone’s expectations this year, especially following a lackluster 2013, a correction could occur with little warning. For now, however, it appears as if resources could continue their strong performance for at least the near-term and hopefully much longer.
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