Commodities & Economic Activity
While this initial phase of inflation and soaring commodity prices has been all encompasing and coincided with a fairly robust economy, one needs to become more discriminating going forward. Many investors and members here, have been bullish on a wide variety of stuff and that has worked out so far. The economy is clearly starting to slow and roll over as a result of inflation and higher interest rates. Those hanging their hats on things that are very sensitive to the economy, like copper and oil amongst others, are likely to be disappointed. Even when China ends their Covid lockdowns, the slowing US and most of the industrialized world will see gluts form in oil first, copper and eventually semiconductors as well. Food, grains, chicken, pork, beef etc will continue to ramp up because while some substitutions will take place, people still need to eat. The ultimate inflation hedge, (gold and silver)despite price suppression and manipulation, will also continue higher. There are always stocks and other things that go up even in bear markets, just not as many as in bull markets.
Meanwhile, we get a double top breakout on oil, with projections of north of $200. WTH.
I follow five key guys on Twitter to complement Rambus. Consensus is up from here. WAY up.
Markets, as we know from precious metals, seldom make a lot of sense. And trends last longer than one’s bank account.
Example: Biden dumps a bunch of “free oil” on the market from the strategic petroleum reserves. Market ignores.
Central banks buying gold like it’s going out of style. Gold gets hammered.
Gold miners in production minting money. Profits like never seen in many decades. Market ignores.
My bet: demand for oil slows (perhaps even declines), and oil goes UP.
Ditto nat gas.
Lots of people have been calling for $150-$200 oil for months. The charts says it topped at $130 in early March and has been making lower highs since. Check back when it takes out $130. Until then I go with what the futures contracts say. $20 lower by the end of this year and $20 lower than that by the end of 2023, at least.
From your keyboard to God’s ear. I will indeed check back when oil breaks $130…
CM, I am indeed studying the $WTIC daily, and especially the weekly, and monthly charts. Those CHARTS say the price did indeed top out after the $130.50 spike. I personally don’t know if it’ll be $20 lower by the end of 2022. For example, if we have a recession, then the price could be much lower than $20. The 61.8 Fib retracement price is $53.87. Just speculating, that’s all.