As we start the New Year, we look back on 2010 and find that Commodities outpaced any other asset class with a 15% return based on a basket of Commodities. Compare this to Stocks 13%, Bonds 5%, and Dollar-based trades of 2%. Why is this? For starters, we are in a secular bull market for Commodities that started in approximately 2004. Commodity markets typically trend for 16 – 18 years during these cycles. We are in the infant stages of this bull market. Commodity markets are true supply and demand markets. Some sectors are:
Think of these sectors and how every day of our lives we come into contact with the majority of them. Compare this to a product a company makes like an iPod. Do we really need an iPod to survive? Absolutely not! With the world population expanding by almost 80 million people per year, we are seeing more demand put on the supply of Commodities than ever before.
The world supply of natural resource Commodities that once were...
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