In part 3 of this in-depth report on commodities we’ll look at many individual areas to see what their long term charts look like. In order to find long term truning points, bottoms in a bear market or tops in a bull market, the only way that is possible is to look at the big picture. Keep in mind when looking at these long term charts that the process of reversing from a bear market in commodities to a bull market is going to be gradual in the beginning. It will be debated for several years before the realization that inflation is actually taking hold and there will be no more denying the fact. The next debate will be, how high will the inflation rate go? I think the Chartology will keep us one step ahead of the crowd.

Most investors have their own way to determine whether we are in an inflationary or deflationary environment. For me personally I like to use a ratio combo chart which has the TIP:TLT ratio in black on top overlaid on the TLT in red with the CRB and the GDX below. Below is a long term weekly chart that goes back to the 2011 high when many commodities and the PM complex topped out. As you can see the ratio in black has been in a steady decline for close to 10 years now along with the CRB and the GDX.

Why do I think we are at the very beginning of a possible inflationary environment? The first little clue will be if we see the possible small red H&S top complete and breakdown on the TLT which would coincide with the small reversal pattern on the black ratio to begin a strong rally to the upside. Now look to the bottom of this combo chart where the CRB and GDX are located. Note how the CRB, TLT and the TIP:TLT began reversing 2 months ago in April, black dashed vertical line.

It is generally understood that the precious metals complex usually leads the rest of the commodities higher at important bottoms. Now lets look at the GDX on the very bottom where you can see this happening in real time as it has already broken out above its 2016 overheard horizontal resistance line while the CRB index is still trading below its 2016 resistance line and it 30 week ema. So if the PM complex is leading commodities higher then they should follow the PM complex higher which should eventually lead to some degree of inflation down the road.

More Charts and More reasons to be watching certain Commodities …for Members