Commodity Revenue Periodic Table (2022 Edition)
For investors, 2021 was a year in which nearly every asset class ended in the green, with commodities providing some of the best returns.
The S&P Goldman Sachs (GSCI) Commodity Index was the third best performing asset class in 2021, returning 37.1% outperforming real estate and all major stock indexes.
This chart from US Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.
Commodity prices will rise in 2021
After the strong performance of commodities (particularly metals) in the previous year, 2021 has been all about energy commodities.
The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to US Global Investors, coal was also the least volatile commodity in 2021, which means investors have been enjoying a smooth ride as fossil fuel prices rise.
Source: US Global Investors
The only commodities in the red this year were precious metals, which failed to stay positive despite rising commodity and asset price inflation. Gold and silver returned -3.6% and -11.7%, respectively, with platinum returning -9.6% and palladium, the worst performing commodity for 2021, at -22.2%.
Aside from precious metals, every other commodity has managed positive double-digit returns, with four commodities (crude oil, coal, aluminum and wheat) having their best single-year performances over the past decade.
Energy commodities outperform as the world reopens
The partial resumption of travel and the reopening of businesses in 2021 were a strong catalyst that fueled higher energy commodity prices.
After crude oil prices fell to negative prices in April 2020, black gold saw a strong comeback in 2021 as it returned 55.01% while it was the most volatile commodity of the year.
Natural gas prices also rose significantly (46.91%), with natural gas prices in the UK and Europe rising even further as supply constraints come into play as winter demand rises.
Despite being the second worst performer of 2020 with a clean energy transition on the horizon, coal was the best commodity in 2021.
High demand for electricity has seen coal come back in style, especially in China which accounts for a third of global coal consumption.
Base metals are superior to precious metals
The year 2021 was a tale of two metals, in which precious metals and base metals had conflicting returns.
Copper, nickel, zinc, aluminum and lead, all essential to the clean energy transition, maintained positive returns last year as electric car batteries and renewable energy technologies attracted the attention of investors.
It looks like demand for these energy metals will continue into 2022, as Tesla has already signed a $1.5 billion deal for 75,000 tons of nickel with Talon Metals.
On the other end of the spectrum, precious metals have simply sank like a boulder last year.
Investors have turned to stocks, real estate, and even cryptocurrencies to maintain and grow their investments, rather than the traditionally preferred gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, returning only -9.64% and -22.21%, respectively.
Cereals are making steady gains
In a year of underperforming and underperforming, the cereal maintained its steady record and achieved its fifth consecutive year of positive revenue.
Both corn and wheat provided double-digit returns, with corn hitting eight-year highs and wheat reaching prices not seen in more than nine years. Overall, these two pills followed the 2021 trend of increasing food prices, with the Food and Agriculture Organization of the United Nations Food Price Index reaching a 10-year high, rising 17.8% over the year.
With inflation rising in goods, assets and consumer goods in 2021, investors will now be watching sharply for a pullback in 2022. We will have to wait and see whether or not the Fed’s plans to increase prices and reduce asset purchases will provide price stability in goods.