Commodities jumped 11 percent in the third quarter, the biggest gain since March 2011, as central banks and governments announced plans to promote growth. The Fed said Sept. 13 it would buy $40 billion of mortgage debt a month, and the European Central Bank announced plans on Sept. 6 to buy an unlimited amount of sovereign debt. China last month approved road and subway projects to boost investment.
The GSCI is heading for a fourth consecutive year of gains, surging 90 percent since the end of 2008, after record stimulus measures helped the global economy recover from the worst crisis since the Great Depression. The Fed bought $2.3 trillion of debt in the first two rounds of quantitative easing.
Money managers added $1.56 billion to commodity funds in the week ended Sept. 26, with $1.48 billion going to gold and precious metals, according to Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows.
“I see commodity prices rising,” said Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management, who helps oversee more than $1 billion of assets. “The amount of liquidity in central banks around the world that is being added is significantly greater than anything we’ve seen in history.”
Most raw-material prices “appear to be topping out now for the rest of the year and quite possibly through 2013,” Edward L. Morse, Citigroup Inc.’s global head of commodities research in New York, wrote in a Sept. 24 report. “A major factor is China, where demand has led the commodity boom for the past decade, but lower growth and structural change in the world’s second-largest economy spell looser markets ahead.”
Chinese industrial companies’ profits dropped for a fifth month in August, the National Bureau of Statistics said Sept. 27. International Monetary Fund Managing Director Christine Lagarde said Sept. 24 that global growth may be “a bit weaker” than the Washington-based group forecast in July.
Caterpillar Inc., the world’s biggest construction and mining equipment maker, cut its forecast for 2015 earnings on Sept. 24. The company is expecting moderate and “anemic” growth through 2015, Chief Executive Officer Doug Oberhelman told an industry conference in Las Vegas.