Certain commodities such as gold and oil have surpassed other investment vehicles in the past 3 months as currencies plummet and conflict continues in Syria.
According to data from S&P GSCI (Standard & Poor Goldman Sachs Commodity Index), for the month of August, commodities have been performing exceedingly well on the market lately. In fact, U.S. crude oil has been maintaining high numbers for two years now, investor confidence in gold has created exceedingly positive results, and numbers for 24 raw materials increased by as much as 3.4%.
According to West Texas Intermediate, oil price rose for the third month up to 2.5%, which now makes each barrel worth $107. However, the price recently dipped about 0.8% again. Meanwhile, the European oil benchmark called Brent increased their prices up to 5.9%, which now makes each barrel worth about $114.01. These numbers, data indicates, makes up about half of the growth in commodities revealed by S&P GSCI.
For gold, its value in London increased about 5.3%, which now makes it about $1,395 an ounce. However, it decreased to $1,392 recently. According to about half of the analyst estimates that have been gathered by Bloomberg, gold could averaged at $1,295 in the fourth quarter of the fiscal year.
Meanwhile, the best performing commodity to date is silver as it rose up to 18%, making it $23.5225 an ounce. According to analyst estimates gathered by Bloomberg, the precious metal might have an average of $21 in the fourth quarter of the fiscal year.
On the other hand, stocks (including dividends) fell about 25% on 45 stock markets, according to MSCI All Country Index, while all kinds of bond decreased by an average of 0.352%, according to Bank of America Merrill Lynch Market Index.
As news of Syria using chemical weapons against its own people spread all over the world, and western nations argued whether to attack the country for the said atrocities, concerns regarding the supply of crude oil from the Middle East have been increasing. Due to this, many pulled out their investments, particularly stocks and bonds, by the end of the fifth month of 2013 that amounted to about $44 billion. Fortunately, raw materials negated those losses as official data regarding economies of China, Europe and the U.S. indicates positive economic growth.
Wells Capital Chief Investment Strategist James Paulsen said, “There is definitely a stealth recovery going on in commodities.” He added, “Bonds are getting killed, and stocks stopped going up as a result of the re-pricing going on in bonds. Things are still good enough to prevent stocks from going down a lot.” Wells Capital Management, the organisation to which Paulsen belongs, supervises assets that are around $340 billion.
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