Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

A New Commodities Bull Market is Emerging

Commodities / Commodities Trading Jan 25, 2018 - 05:56 PM GMT

By: Peter_Degraaf

Commodities

We’ve all watched in amazement, while the equities markets around the world have risen to new highs.  On Wall Street hardly a week goes by without a new record.  There comes a time however when a sector becomes so overbought, that smart money begins to leave and search for a sector that has been overlooked.   That moment is now at hand, as can be seen in our first chart – courtesy sources listed.




This chart compares equities to commodities.  In 1970, 2000 and today, equities have become overpriced, while commodities are oversold and cheap by comparison.  In 1973, 1990 and 2008, oil and commodities became overbought and investors sold commodities and bought stocks.  If history repeats (and it often does), we are about to witness a massive switching from equities into commodities.  This trend may or may not include oil, since it is already in a bull market, but because of ongoing demand in Asia it will include such items as natural gas, copper, lithium, vanadium, zinc, and cobalt, and the stocks of the companies that mine and produce these commodities will be in great demand.


    
This chart courtesy Zerohedge.com shows the average number of days in the US stock market between occasions where the index drops 5% or more is 92 days, all the way back to 1929.  In the mid-1960s there was a stretch without a 5% correction for 386 days.  In the mid 1990s the index went 394 days without a 5% correction.  And now (as of Thursday Jan 25th) we have gone a record 399 days without a 5% pullback.  So The S&P has NEVER been this over-valued, NEVER been this overbought, and NEVER gone this long without even a minor correction.   Odds are.....

  
This chart courtesy goldchartsrus.com shows US Money Supply continues to rise, across all measures.  This money needs a destination, and with the stock market in bubble territory, a lot of this money is destined for commodities.

    

This chart courtesy sources listed shows an inflation gauge that is used by the NY FED.  It is called the Underlying Inflation Gauge, and you can see it here as a light blue line.  It is warning that price inflation is underway.  At www.pdegraaf you’ll see that the Model Portfolio (which reflects live transactions) is currently ahead by 38% - well above the rate of inflation.  It is very important that our investments stay ahead of the rate of inflation. 


    
Featured is GNX the commodity index.  Price is breaking out above lateral resistance, after already having broken out from beneath the 200WMA.  The target for this breakout is at the green arrow.  The supporting indicators are positive. 


This chart courtesy Mark J. Lundeen will be a surprise to some.  It compares US bonds, stocks, silver and gold to currency in circulation.  The surprise is that since year 2000, gold has outperformed equities by 4.60 to 2.27.   Even silver, - in an 18 year span, - has outperformed the stock market.  It was inflation that propelled gold and silver to rocket higher in the late 1970s.  Is history about to repeat?  Whenever commodities are in a bull market, gold and silver tend to shine.

Peter Degraaf is NOT responsible for your trading decisions.  Please do your own due diligence. 

By Peter Degraaf

Peter Degraaf is an on-line stock trader with over 50 years of investing experience. He issues a weekend report on the markets for his many subscribers. For a sample issue send him an E-mail at itiswell@cogeco.net , or visit his website at www.pdegraaf.com where you will find many long-term charts, as well as an interesting collection of Worthwhile Quotes that make for fascinating reading.

© 2018 Copyright Peter Degraaf - All Rights Reserved

DISCLAIMER:Please do your own due diligence.  Investing involves taking risks.  I am not responsible for your investment decisions.

Peter Degraaf Archive

© 2005-2022 http://www.MarketOracle.co.uk - 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