This Beautiful Quilt Illustrates How Hard It Is To Pick Winners In The Commodities Market

2013 was a really terrible year for commodities, as flagging demand worldwide ate into prices.

Just four major commodities – natural gas, oil, palladium and, barely, zinc saw year-over-year price gains, according to the “commodities quilt” below from U.S. Funds. Growth in the top performer, natgas, which climbed 33%, diverged 66% from the worst performer, corn, which fell 23%.

That may seem extreme, but it’s been worse: in 2006, the disparity was almost 200 per cent between winning nickel and losing natural gas.

It’s also importants to recognise that annual returns for each commodity can be quite volatile. That’s why the pattern of colours in the quilt is so chaotic.

“The price movement of commodities is historically both seasonal and cyclical,” wrote the folks at U.S. Funds
. “That’s why when investing in natural resources, we believe it is important for your portfolio to hold a diversified basket of commodities and to be actively managed by professionals who understand these specialised assets and the global trends impacting them.”

Here’s a skitched-up version showing how volatile natgas and corn have been over the past few years:

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