Commodities Take the Lead as Washington Policy Uncertainty Drives a Flight to Safety

The safest trades this year came straight out of the ground. The WisdomTree Commodity Index FundGCC

is up 10.7% YTD through Jan. 23, comfortably outperforming every major asset class. Precious metals are leading the move, with gold up more than 17% and silver surging 44%. Natural gas has also hit three-year highs after Winter Storm Fern cut production by 9% while pushing power demand to record levels across multiple grid operators.

• US stocks are eking out a 1.6% gain via the Vanguard Total Stock Market ETF, while US investment-grade bonds are flat at ~0.2% through the Vanguard Total Bond Market ETF.
• RSM US’s Joe Brusuelas believes gold is drawing defensive capital as investors hedge against Washington’s unpredictable policy risk.

The real kicker: Brookings Institution’s Robin Brooks calls the precious metals surge “breathtaking and profoundly scary,” warning it could mark the start of a global debt crisis. That anxiety shows up in central banks holding more gold than US Treasuries for the first time in three decades. Still, TwinFocus CEO Paul Karger believes investors are “calling bunk on currencies” as they seek alternatives to the dollar, amid ongoing policy uncertainty in Washington.