Some observers argue that the unorthodox easing by many of the world's largest central banks will debase currencies and encourage investors to flock to hard assets, things as one pundit put it, hurt when your drop on your feet.
It sounds reasonable, except for one thing, the facts. Despite the Fed's QE3+, the ECB's Long-Term Repo Operations and Outright Market Transactions, the SNB's dramatic increase in reserves as it defends its currency cap, the BOJ's continued incremental increase in its asset purchase plan, and the PBOC's continued balance sheet expansion, commodities, as a whole, were among the worst performing asset classes in 2012.
This Great Graphic comes from Business Insider, which got it from Oppenheimer Asset Management. It shows the performance of the various components of the CRB index. Monetary policy, conventional or otherwise, is too blunt of an instrument and explanatory variable to explain the variance about the different commodities.
Monetary policy would imply a demand shock as investors flee the debasement of paper money for real assets. However, we continue to find that supply shocks offer a more compelling explanation. In terms of currency movement, we tend to emphasis capital flows over trade flows, especially for the major currencies, including what many see as "commodity currencies", like the Australian and Canadian dollars.