Despite a late-year decline, gold prices rose 7% in 2012 – the metal’s smallest return since 2008, but its 12th consecutive year of gains.
Silver had an even better year. The price of silver increased 8.3%, finishing the year above $30 an ounce for the first time ever.
If you’re a commodity investor, another strong year from gold and silver was no surprise. Those two metals have become reliable safe havens that long ago earned a reputation for producing regular annual returns.
But there were several overlooked commodities that trumped gold and silver in 2012. These are assets that are rarely written about, and many of you probably never think of them.
Given how they performed last year, however, it might be worth taking a closer look at these three commodities – at least in the short term.
In order of return size, they were:
- Soybeans: Soybean prices soared last year, rising more than 15% to basically double the returns of both gold and silver. After starting the year at roughly $12 a bushel, soybeans finished at $14.09 a bushel – at one point climbing to a record $18 a bushel in midsummer. Summer droughts in both the U.S. and Brazil cut down on production, pushing prices to all-time highs. Wetter weather and increased plantings contributed to the late-year drop-off in soybean prices. Despite the pullback, this was the second-most profitable year to be a soybean investor since 2007.
- Platinum: One of the most valuable precious metals in existence, platinum is often overshadowed by gold, silver and even copper. But platinum had a better year than all of them, rising 10% to $1,540 an ounce. Used in catalytic converters, platinum has rallied in lockstep with the global recovery of the auto industry. Worldwide car sales were projected to hit a record-high 80 million units in 2012, with demand returning in the U.S., Japan and China. Meanwhile, platinum’s use as a fine jewel gained further traction in India, where demand increased between 25% and 30% last year. Platinum’s appeal in two very different markets should make for another strong year for this forgotten metal in 2013.
- Corn: Okay, so corn prices didn’t quite match silver’s 8.3% jump. But the 7.8% increase in the cost of the crop managed to outpace both gold and copper. Similar to soybeans, the summer drought was responsible for much of corn’s 2012 surge. The price of corn has come way down since topping $8 a bushel in late August. At less than $7 a bushel now, however, the price of corn may have overcorrected. With supplies tight and predictions of another midsummer drought in key corn production states, prices may soon return to where they were this past summer.
None of the commodities I just mentioned are as sure a thing as gold or silver. They haven’t risen for 12 straight years like gold, nor have they increased six-fold like silver has in the past decade.
Not one of these commodities is guaranteed to rise again in 2013.
Rather, they are examples of why, as commodity investors, we should occasionally peer outside our gold and silver bunker when searching for healthy returns. Over time, gold and silver are your safest bet. But if you’re willing to take on a bit more risk in the short term, investing in under-the-radar commodities such as these can result in a huge end-of-year payday.