It's now official: Those holding out for the supposed safe haven premium of the commodity sector have become the ultimate "Waiting for Godot" guys; i.e., they've been stood-up. This May, the Reuters/Jefferies CRB Index of commodities fell headlong to a nine-month low after recording its steepest one-month decline in two years.
Without question, the hard-asset hedge NO-SHOW has come as quite a shock to the financial mainstream. In late 2009, the CRB Index saw its strongest annual growth since 1973. And, according to the usual suspects, the bailout brigade of Helicopter Ben Bernanke (and global fleet of bond-buying banks) was going to send commodity prices into an inflationary gain-spiral.
But don't take my word for it. The following slew of news items from the time say more than I ever could:
- "The Case for Commodities. In an age when major financial institutions can go bust overnight, [concrete commodities] hold a lot of appeal." (December 17, 2009 Bloomberg BusinessWeek)
- "Commodities Bull Market Will Roar Like A Tiger In 2010" (January 6, 2010 Market Oracle)
- "Commodity Stocks To Boom In 2010. Those stocks are going to be the best performers in 2010." (Jan. 6, 2010 International Business Times)
- "Prices are rising even as the dollar rises, suggesting that the commodity markets are truly beginning to understand that global demand is rising and that that demand is the new driving force in these markets." (January 20, 2010 Reuters)
- "The investment flow into commodities is expected to continue at the same kind of pace we saw this year, which leaves them with nowhere to go but the upside." (January 21, 2010 Associated Press)
YET -- from its January 6, 2010 peak, the CRB Index committed fully to the DOWNSIDE in a powerful, six-month long sell-off.
As for seeing the bearish visitor to the commodity sector before it arrived, Elliott Wave International's team of analysts set the pace via these invaluable insights and images:
January 2010 Elliott Wave Theorist: "Commodities should collapse once again"
January 13, 2010 Short Term Update presented the following chart, alongside this message:
"The CRB Commodities Index has ended its upward correction that started in February-March 2009. Optimism with respect to commodities pushed to 90% last week, the highest extreme since the reversal that is now occuring. Virtually no one expects a big, broad-based market decline to start near current levels. Markets are probabilistic, not certain, so there are never any guarantees. But the evidence is compelling in our view: all-the-same markets are reversing trend from up to down."