For a year in which many commodities set record-high prices, 2011 has proven disappointing for the market as a whole.
Bloomberg notes that for the first time since 2008, the year of the financial crisis in the U.S., commodities as a whole declined in 2011. By 7:26 a.m. on Friday, December 30, Standard & Poor's GSCI Total Return Index, a critical index that comprises 24 major commodities, had fallen to 4,889.7, a decline of 1.1 percent on the year.
The Wall Street Journal notes that the several key commodities in each sector all hit record prices earlier in the year, ranging from the beginning of the year for the critical industrial metal copper to late summer for gold, a common safe haven during times of economic uncertainty.
Of these record setters, however, gold has declined the least at 18 percent below its peak. Cotton, which hit $2.1515 per pound in early March has fallen as much as 57 percent on high production and declining demand.
"What happens next year really depends on what happens with global growth,"Dan Denbow, a co-fund manager of the $2.1 billion USAA Precious Metals and Minerals Fund in San Antonio, explained to Bloomberg. "Investors may not be as quick to come back to commodities unless they get a very good feeling about global growth."
Learn Futures Technical Analysis with The Market's Spine
Give Your Trading the Backbone it Needs to Succeed, The Market’s Spine is a 34-page futures technical analysis guide that details how to read the backbone of recent market activity, explains a handful of indicators that are well known to institutional and fund traders, and more. Expand your futures technical analysis knowledge here.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.