Summary
Oil pulled back sharply from the double top near 80 and put both the CRB and Oil on Neutral since August 10,07.
Commodities have now pulled back roughly 38%, and are unlikely to make new lows before starting the next wave up to new highs.
The weak performance of speculative precious metals vs their stronger industrial metals and oil suggests that the bulk of the gains
in Commodities are still ahead of us, as most of the crowd never really got involved in the first move up since 2000.
Commodities struggle with resistance near their 1981 all time highs
Commodities have been rising within a parallel channel for the last 100 years, but most of the gains occurred very quickly about
every 30 years. These major rallies ended roughly in 1920, 1950, 1980 and we appear to be in the next one expected to end near 2010.
Commodities have now pulled back roughly 38%, and are unlikely to make new lows before starting the next wave up to new highs.
Any pullbacks leading into the 2008 cycle low are likely to be good buying opportunities as we head into the next 2011 cycle high.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Core Commodities are leading while speculative Precious Metals lag
Industrial Metals and Energy have seen the most gains as the transfer of manufacturing to Asia creates demand for building the
infrastructure required. Food has been affected the least, but still shows increases well above the adjusted CPI numbers. While
Energy and Metals may correct, gains in other groups like Food and Precious Metals may compensate and gives us a shallow
correction into the 8 year cycle low in 2008. If this top in Commodities is like most of the major ones, we should expect
Precious Metals to become the leading group on increased speculation by the end. Take note that Commodities went up at the same
rate as Equities over the last 100 years as Inflation has a wide effect over time. Silver is the best performer over this time
easily beating the 1929 gains in Stocks with its sharp rise 10 years earlier in 1920. Silver repeated this feat in 1980 beating
Gold and the large 2000 gains in Equities a full 20 years early.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Silver, Palladium and Gold are all suggesting higher prices are likely
After spending ten years building a bullish descending wedge, Silver bottomed in 1992 a full seven years before Gold did. Unlike
Gold, Silver is consumed by constant industrial demand, and most Central Banks are out of Silver and are not even selling much
Gold anymore. Silver rose sharply near its 4.25 year cycle low, and could easily challenge its 1980 all time highs near 40 by the
next cycle high in 2008. Likewise the Palladium chart looks positive, and the Gold chart looks incomplete adding weight that
Precious Metals will add to the rise in the CRB.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com