Post

Commodities with Negative Returns in the 1970s.

In Investment Returns on April 22, 2011 by CQCA

Despite rampant inflation in the 1970s, the nominal price of some commodities actually decreased. The above data is from the U.S. Geological Survey.

Rhenium is a case of bad timing. According to John W. Blossom’s research, the price of Rhenium spiked in 1970 because it was used to make unleaded gasoline. Extraction processes improved throughout the decade, which brought the price down significantly. In 1980, the amount of Rhenium in gasoline was doubled, causing the price to skyrocket again, surpassing the 1970 price.

The previous article on this website showed that the S&P 500 did not keep up with inflation. The above decreases are calculated using current, unadjusted Dollars. If the CPI was used to adjust them, the losses for investors would be even larger. Inflation does not create easy money for all investments.

Comments Off on Commodities with Negative Returns in the 1970s.