Indicators Suggest Commodities Will Continue to Rise

We continue to see encouraging sings for the "inflation trade". Leading inflation indicators have so far refrained from breaking down; the same can also be said for commodities.

Inflation protected treasuries remain in an uptrend against non inflation protected Treasuries both in the US and internationally.

Emerging and developed markets, coal stocks and the broad market indicate that upcoming growth is like to provide a very nice surprise on the upside. Commodity based currencies are continuing their slow but steady advance against the USD and Euro.

We believe that commodity prices will increase rather than decline of the coming weeks and months. Whilst the food groups has been the only real drag on the commodities sectors, we believe that the base metals groups is a much better historical indicator of world growth and inflation.

Disclosure: Long DBC, FXA

Comments

[AndrewBaker:]

With the dollar going south, commodities, especially those traded in dollars, will likely rise in US$ price as suppiers will want the price in their own home currency not to fall as the dollar does. Apart from that, a number of commodities have got their own story for a price rise too, so for more than one reason, commodities generally look to be in an uptrend going forward.

Jul 29 09:17 AM

[j_remington:]

Wow you are really incorrect on this one. Commodities rise due to demand. With curbs put in for commodity trades there is no chance for rising prices without demand. Look back a few years(pre 2006) and you will see that current prices are due to be flat at best.

Jul 29 02:07 PM

[SageNot:]

Crude oil & their products have failed to break out, what TA are you looking at? Your charts must be upside down, & where did you say the demand was going to come from? Even the oversold natural gas can't gain support, it's going lower still.

Gold has also failed to break upside resistance, & silver is being investigated for huge frauds in their ETF's, that's a bummer!

Jul 29 09:14 PM

[Daily Trading:]

The question is does the bond and currency markets lead commodity markets or is it the other way around. Experience tells us that the currency and bond markets lead commodity markets.


On Jul 29 09:14 PM SageNot wrote:

> Crude oil & their products have failed to break out, what TA
> are you looking at? Your charts must be upside down, & where
> did you say the demand was going to come from? Even the oversold
> natural gas can't gain support, it's going lower still.
>
> Gold has also failed to break upside resistance, & silver is
> being investigated for huge frauds in their ETF's, that's a bummer!
>
>
>

Jul 29 10:50 PM