Bulls Oust Commodity Bears in Fastest Turnaround Since 2008
September 14, 2012 by Gold Editor
SOURCE: [Bloomberg] - Commodities are surging from a bear to a bull market in the fastest turnaround since the depths of the financial crisis four years ago as traders await economic stimulus measures from central banks. Within 11 weeks the Standard & Poor’s GSCI spot index rose 22 percent from its 2012 low, stoked by falling supplies of oil and grains and speculation that the Federal Reserve will prop up U.S. growth while the European Union ends its sovereign debt crisis. The gauge of 24 raw materials soared to a record high four years ago before plunging as the U.S. slid into the deepest recession since the 1930s.
After the jobless rate stayed at more than 8 percent for 43 months, traders are speculating that Fed Chairman Ben S. Bernanke will unveil a third round of so-called quantitative easing as soon as this week. Corn prices are about an all-time high after the worst U.S. drought since 1956 and oil is rising amid mounting tension over Iran’s nuclear program.
“There have been a lot of moving parts within the commodities markets this year,” Jim Paulsen, chief investment strategist in Minneapolis at Wells Capital Management, which oversees $320 billion, said in a telephone interview. “We are turning a corner. The surprise is going to be that global growth is going to accelerate.”
Commodities Rising The S&P GSCI Agriculture Index rose 33 percent after dipping to a 2012 low on June 15, and the S&P GSCI Energy Index advanced 25 percent from its bottom on June 21. Oil rebounded 25 percent to $97.01 a barrel today on the New York Mercantile Exchange from its low for the year on June 28, and corn surged 52 percent to $7.695 a bushel since June 15 at the Chicago Board of Trade. Energy and agriculture together make up more than 85 percent of the S&P GSCI.