Not all commodities shine

Gold is up another 20% in USD year-to-date, +78% over the last 12 months, and it has tripled over five years. One key driver is the so-called “debasement trade”: investors lose confidence in fiat currencies and turn to gold as an ultimate store of value.

What is more surprising is how isolated this move has been. The renewed appetite for gold has not translated into a broader commodity rally. As the chart illustrates, an equal-weighted commodity index has been broadly flat over the past three years. There are notable exceptions—silver, for instance, is up ~182% over the last 12 months—but it is difficult to argue that commodities as a whole are sharing gold’s trajectory.

This is precisely why selectivity remains essential in the space. At ECP, our experienced colleagues Boris Cukon and Vincent Vandamme manage our in-house ISATIS Investment Global Natural Resources Flexible Fund, which we actively use in our asset allocation.