31 Dec

Commodities Market Rout Takes Gold and Silver with It

WRITTEN BY Meera Shawn FEATURED IN Macroeconomic Analysis

Commodities rout

The year 2005 posed weakness not only in the beloved precious metals but also in other commodities. Commodities are well known as alternate forms of investment. Briefly seen as a hedge against other investments, commodities may perform well during equity market routs, and vice-versa. The commodity index, represented by the S&P GSCI (Standard & Poors Goldman Sachs Commodity Index) has fallen about 25.5% in 2015. The loss in the commodities market took gold, silver, and the other two precious metals along with it.

Commodities Market Rout Takes Gold and Silver with It

As depicted in the above graph, gold, silver, and platinum have fallen 10.6%, 12.1%, and 28.6%, respectively, in 2015. Gold and silver were ranked 13 and 11, respectively, on Wednesday, December 30, among the 24 commodities listed on the S&P GSCI. However, the rankings are far better on a year-to-date basis. Gold and silver stand at six and seven, respectively, in 2015. This shows how devastating 2015 has been for commodities.

Tracking the miners

Mining stocks such as Randgold Resources (GOLD), Peabody Energy (BTU), and Freeport-McMoRan (FCX) have fallen 8%, 93.1%, and 70.8%, respectively. This tells us that precious metal miners are in a comparatively better position than diversified metal miners such as BTU and FCX. FCX and BTU together make up 8.1% of the SPDR S&P Metals and Mining ETF (XME). GOLD contributes 4.9% to the VanEck Vectors Gold Miners ETF (GDX).

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