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Commodities rallying, outperforming equities in 2018

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Electronic displays at the Chicago Board of Trade. (Photo: Wikimedia Commons)

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 Electronic displays at the Chicago Board of Trade. ( Photo: Wikimedia Commons )

Electronic displays at the Chicago Board of Trade. (Photo: Wikimedia Commons)

After years in the doldrums, commodities are finally having their day. When equities markets underwent a correction in January, commodities escaped the worst of the pain, rallying on strong projections for global growth in demand: just because large corporations suddenly seemed overvalued compared to their earnings did not mean that people would stop using oil, copper, wheat, and nickel. Traditional havens like gold have also performed well against equities.

The chart below compares the year to date relative returns on S&P’s Goldman Sachs Commodities Index (black) with the S&P 500 (orange): 

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(Chart: Bloomberg)

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 ( Chart: Bloomberg )  ( Chart: Bloomberg )

(Chart: Bloomberg)