How And Why I Am Breaking My Rules For Commodity Trading

John Overstreet profile picture
John Overstreet


  • I present five principles for commodity trading rooted in 300 years' worth of data.
  • The long-term principles point to depressed commodity returns throughout the remainder of the decade.
  • Most of the short-term principles point to negative returns over one- to three-year periods.
  • But this momentum within this context of late-stage equity supercycles and systemic risk suggests taking out insurance against extreme inflationary outcomes.
  • Because commodity prices are likely to see extreme reversals, commodity positions should be small and be overweight gold.

Oil storage fire. The tank farm is burning, black smoke is combu

LYagovy/iStock via Getty Images

When an asset class is moving 5-10% a day in a single direction and the terminal point is demand destruction - and "demand destruction" is likely a euphemism for "general market implosion" - what rating ought one give that class? Buy, sell, or hold?

This article was written by

John Overstreet profile picture
I study markets from a long-term historical view, especially the interaction between yields and inflation across all major asset classes. I have a bachelor's degree in political science, history, and intelligence analysis, and a master's in political theory. My Seeking Alpha articles have been mentioned in Marketwatch and Real Clear Markets. I have lived in Asia for twenty years.

Disclosure: I/we have a beneficial long position in the shares of CMDY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long QID, SSG, and SH.

Recommended For You

Comments (31)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.