Over the past half-century, commodities have never been cheaper relative to equities than they are right now. And while the stock market continues to notch new highs, an eerie calm hangs over the commodity trading pits.
With wild price swings, massive upcycles, exciting resource discoveries and extreme weather events all playing into things, theres usually never a dull day in the sector, writes Visual Capitalists Jeff Desjardins. That being said, its hard to remember a more lackluster period for commodities than in the last couple of years.
This chart from Incrementum AG suggests it wont last:
As you can see, the divergence is certainly reaching historic levels thanks to a 200%-plus move on the S&P SPX, +0.64% since the 2009 crisis compared with a 31% decline for the Goldman Sachs Commodity Index over the same period.
We saw similar extremes in the early 1970s and leading up to the dot-com bubble. In both of those cases, of course, stocks began to crumble.
Will this time be different?
For bottom-fishing purposes, here are the biggest commodity losers so far this year:
It has been an ugly year overall for commodities thus far, but in particular sugar SBV7, +1.51% iron ore and oil CLQ7, -2.61% LCOU7, -2.56% all suffered double-digit losses in the first-half of 2017.
For commodity bulls, the good news is that the sector is no longer tanking, Desjardins explained in his chart-heavy blog post. The bad news, however, is that all the recent action has been in relatively niche sectors, as metals like cobalt, zinc, and lithium all have their day in the sun.