Unlike 2011 last year proved to be mostly a positive year for most risk asset classes as shown in the EMI Investment Leader Board below. The Yen/USD switch was the biggest loser on the board with Wheat showing the largest percentage gain for 2012 as a result of the linger drought in the farm belt in the US. For all of the talk of the US dollar completely falling out of bed as a result of all of the money printing by the US Fed the US dollar was only marginally lower for the year while it remains the world's reserve currency and safe haven.
Gold ended the year in positive territory for the twelfth year in a row gaining 7.03%. Silver gained 8.44%. Copper was up by 6.44%. Copper is an industrial metal that is highly dependent on the Chinese economy (to a lesser extent other emerging market economies). China and the rest of the emerging market economies grew modestly in 2012 and so did copper consumption.
What a difference a year makes ...a drought and Wheat, Soybeans and Corn end the year in positive territory. Wheat was up by 19.19% while Soybeans gained 18.38%.
In the energy sector oil was able to hold onto positive gains across the board for the with the exception of WTI with RBOB leading the complex higher for the year. In 2012 oil fundamentals played a bit of a supporting role in firming prices. Since the beginning of the financial crisis back in 2008 oil supply, demand and inventory balances have continued to move toward a more normal pre-recession level.
On the other end of the energy complex...natural gas has finally put in a positive year after declining for four years in a row. Nat Gas supply has continued to be been robust in 2012 with no sign that there will be any supply issues in the medium to even longer term perspective especially with the current winter weather still not consistently normal. Nat Gas prices increased by 12.11% in 2012 after falling about 31% in 2011 as a result of the continued success of exploration and producing...especially in the area of shale gas development. Supply has continued to outpace demand and will likely continue to do so for the foreseeable future. Upside price movements in Nat Gas will continue to be limited by the more than adequate supply and inventory situation and prices will remain mostly weather driven for at least the next several months. Nat Gas is starting 2013 above $3/mmbtu however, total NG inventories significantly above the five year average for this time of the year. If the winter does not arrive pretty soon (and remain in place) Nat Gas could be testing the $3/mmbtu support level.