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This Commodity was the Decade’s Worst Performer, but Led in 2013

February 12, 2014

How dramatically things can change in a decade.

We’ve talked about how volatile resources can be, and 2013’s top commodity performer is an excellent example. Per our latest Periodic Table of Commodities Returns, natural gas increased the most in 2013. However, the commodity is still the worst performer over the past 10 years. You can see several times when gas fell toward the bottom: in 2006, 2009, 2010 and 2011. However, by 2012, gas climbed to the top half of the chart, clamoring for the top spot in 2013.

While every commodity has wide price fluctuations, in the case of natural gas, this season’s arctic weather in the U.S. is having a strong effect on pricing, as demand soars and inventory levels fall below normal.

According to the U.S. Energy Information Administration (EIA), the seasonality effect on natural gas prices has been decreasing in recent years. Take a look at the chart below, showing the average price spread in October between natural gas futures contracts for delivery in November of the current year and February of the next year. In 2010, the spread was an average of 65 cents per million British thermal units. By 2013, the average spread decreased to 24 cents.

Teranga Gold's 2013 Guidance Continues Strong into the New Year
click to enlarge

According to the EIA, several factors contributed to the lower spread, including increased U.S. production, which we highlighted in our Special Energy Report.

Will the spread continue to narrow? Time will tell, but in January 2014, the commodity kept rising, jumping nearly 20 percent in one week, and breeching the $5 level for the first time since 2010.

Download your copy of the Periodic Table today. Looking back at the annual rotation of leaders illustrates not only the seasonal and cyclical effects on commodities, but also how commodities can be disrupted. You’ll see why this chart is one of the most sought-out pieces by investors around the world.

Rob Wile from Business Insider recently highlighted this “beautiful quilt,” showing a “skitched-up version” comparing the volatility of natural gas and corn.

Also take time to read the article by Frik Els from mining.com, who talks about how the periodic table highlights how gold was the least volatile of all commodities. To Mr. Els, the chart “shows just what a fickle market commodities can be with wild price swings from year to year.” Read the article here.

What will be the top performing commodities in 2014? Stay tuned for more details about our webcast in March where we’ll discuss factors investors shouldn’t miss in commodities, emerging markets and domestic stocks.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.

Past performance does not guarantee future results.

Returns are based on historical spot prices or futures prices.

Net Asset Value
as of 12/17/2014

Global Resources Fund PSPFX $6.71 0.25 Gold and Precious Metals Fund USERX $4.97 0.15 World Precious Minerals Fund UNWPX $4.49 0.14 China Region Fund USCOX $7.96 0.06 Emerging Europe Fund EUROX $6.76 0.05 All American Equity Fund GBTFX $32.22 0.62 Holmes Macro Trends Fund MEGAX $22.35 0.48 Near-Term Tax Free Fund NEARX $2.26 No Change China Region Fund USCOX $7.96 0.06