Commodities have substance in a bimodal world

In an investment landscape more uncertain than usual, asset allocators and fund managers have a tough year ahead. Any outlook for conventional financial instruments stocks and bonds needs to be predicated on a view of the world that has, in the words of bond market sage Bill Gross, managing director of Pimco, shifted from the “new normal” to the “paranormal”.

“A new duality credit and zero-bound interest rate risk characterises the financial markets of 2012, offering the fat left-tailed possibility of unforeseen policy delevering or the fat right-tailed possibility of central bank inflationary expansion,” wrote Gross in a letter to his investors last week. Gone is a world of muted...