Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Commodities Base-building into May

Commodities / CRB Index Apr 01, 2009 - 02:19 PM GMT

By: Donald_W_Dony

Commodities Best Financial Markets Analysis ArticleKEY POINTS:
• The CRB continues to build a solid foundation for the next advance
• Gold expected to remain near $900 in April as US$ holds above support; $1,200 target
• Oil slowly follows gold’s lead upward; first target is $60

• Natural gas stabilizes near $3.65 support level; waiting for a bounce in April
• Copper’s steady climb indicates a bottom in the business cycle is close
• Base metal prices stick on support levels for fourth month; Asian buying gradually builds
• Agricultural grain prices hold on long-term support lines; the decline is over

The commodities market, in my opinion, represents one of the greatest opportunities for investors over the next few years. I say this for several reasons.

First, most analysts think that this market is dead, and the focus should be centred on big-cap, blue chip stocks. Their argument is that natural resources are a late performer within the business cycle, and, given that the world economy has not even bottomed, why would you buy a market that will only perform well when global growth is rapidly expanding? This classic model of raw materials surfacing during the peak-growth gross domestic product (GDP) periods applies only in times of a stable to strong U.S. dollar. In extended timeframes during which the dollar has been weak (e.g., 1965 to 1980, and 2002 to present), natural resources, and particularly gold and oil, are early to advance.

Second, the vast majority of investors are not looking at the commodity market. Dividend-paying industrials, financials and technology stocks normally garner the spotlight through the media and financial circles, whereas raw materials get a bit of attention only after substantial upward moves. For example, how many investors or analysts were following oil before it reached $100 per barrel? Or gold, before it climbed over $900 per ounce? Very few.

Supply for commodities has remained a challenge for many years. World oil and gas reserves are shrinking, and base-metal exploration has only started to expand after almost two decades (the 1980s and 1990s) of contraction. Any newly discovered energy and metal deposits will take six to eight years to get into production. And, since numerous global projects have been delayed in 2008/09 because of declining commodity prices, the ramping-up of supply to fill world demand for 2010 to 2014 is not a matter of throwing a switch.

Although global demand is clearly soft now, the bottom of the business cycle is expected in early 2010, so can higher demand by too far away?

From a technical perspective, most commodities have shown solid price support since November or December. Gold, which is the leader for the other raw materials, bottomed in October.

Bottom line: The supply/demand balance should favour increasing material prices as the 2010-to-2014 business cycle unfolds and the outlook for global GDP slowly turns positive.

Some upward pressure The much-quoted Commodity Research Bureau (CRB) Index has been pinned in a trading band since December 2008 (see Chart 1 on page 2). This base-building is expected to continue into May.

This is the first page of the April issue. Go to and click on member login to download the full 14 page newsletter.

Your comments are always welcomed.

By Donald W. Dony, FCSI, MFTA

COPYRIGHT © 2009 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

Donald W. Dony Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules