Commodities Take a Beating

While investors have spent the last few days focusing on the events in the financial services sector, commodities have been under heavy pressure.  Much of the focus today was centered on the declines in gold and oil which fell $59 (5.9%) and $4.94 (4.5%), respectively.  Taken as a whole though, the entire sector has experienced a sell-off of record proportions. 

As measured by the CRB Index, the two largest one day declines in the commodity sector (since 1956) both occurred this week.  Below we highlight the ten largest one-day declines in the index as well as the performance of the index going forward.  Fortunately, for commodity bulls, the average return going forward has generally been positive.  At the same time, however, investors who are bearish on the sector are likely to compare the sharp swings to the Nasdaq back in early 2000 (or the equity markets now).

Even after experiencing its two largest one day sell-offs on record, the CRB index still remains well above its recently surpassed highs from 2006, and year to date the index is up over 8%.

 

 

Comments

[Zlatko]

Note that in mid-2005 the CRB index underwent a major revision in its methodology which makes the period before and after not comparable. The CCI index, also provided by the CRB, shows the performance of the "old" CRB.