For over a decade, stocks in the United States outperformed Commodities by a long shot.
In fact, Commodities underperformed for so long, that many investors even forgot that they were an asset class.
“Stocks and Bonds JC!”, they would tell me.
And I would say, “No kids, it’s Stocks, Bonds AND Commodities”.
BSC is how I learned it many many years ago. I know this because BSC was the ticker symbol for Bear Stearns. And since that company has not existed since the last Commodity cycle, I know it was a long time ago.
BSC folks. There are 3 asset classes, not 2.
Many investors got a tough reminder of this as the 60/40 portfolio of Stocks and Bonds just had its worst year in a century.
Meanwhile, here’s how the ratio of Stocks to Commodities looks right now.
After breaking the long-term uptrend, stocks have been in a multi-year freefall relative to commodities. This immediately began after Crude Oil Futures briefly traded below zero.
So now looking at this new downtrend, does it look like it’s over to you?
It certainly does not look like any sort of bottom that I’ve ever seen.
The trend here is still down: Stocks < Commodities.
Now, does this mean stocks can’t go up? No, in that scenario, Commodities outperforming just means that Stocks don’t go up as fast.
They could both be going down too, with Commodities falling less.
All of these scenarios are possible. My bet, for now anyway, continues to be the former, where both stocks and commodities are rising, but with commodities rising faster.
We’ll discuss everything tonight on our first Live Conference Call of the new year. We’ll get going LIVE @ 6PM ET this evening. Premium Members register here if you haven’t already.
Meanwhile, speaking of rising faster, have you seen what Silver looks like when you really zoom out?
Is this a 40+ year base ready to explode higher?
Silver was the big winner in the 4th quarter last year while the US Dollar was declining.
Silver outpaced Gold, Emerging Market stocks, Developed Markets, Oil and anything else you could possibly compare it to.
There’s something happening in the precious metals space. And it’s not something we’ve seen in a long long time.
It’s funny, old gold bugs I used to party with way back in the day during the prior cycle are trying to be besties again.
So this is like a high school reunion, where some of us moved on and grew up, while others just stayed living at home this whole time.
It’s funny being back. I don’t know how long I’m gonna stay. But precious metals keep acting well. I’ll stick around until they stop.
Let me know what you think!