Commodities are in the early innings of a secular bull run.
The list of raw materials hitting all-time highs since 2020 includes Gold, Copper, Wheat, Soybean Oil, Cattle, Orange Juice, Cocoa, Heating Oil, Gasoline, Palm Oil, Lumber, Tin, Rebar, Iron Ore, and Coal. (If that roll call doesn’t scream commodity supercycle, I don’t know what does.)
It’s an exhaustive list that will only grow in the coming years. Remember, these cycles can last decades. We’re only in year four!
Of course, there are also some laggards amongst the ranks. (ahem, Crude). But don’t lose sight of the bigger picture!
Even Soybeans are queuing up for new all-time highs…
Check out soybean futures zoomed out to the 1950s:
Three rate cuts remain the base case for 2024. Everyone had this scenario penciled in, including the bond market.
The US benchmark yield is holding at the same levels as last month. T-bonds are catching a modest bid. And bonds are…well, boring.
Perhaps it’s not an ideal scenario for bond bears, but stock market bulls are welcoming the muted response…
The Bond Market Volatility Index $MOVE—the credit market’s equivalent to the VIX—is registering its lowest reading since spring 2022.
The last time the MOVE hit these levels, the Fed had yet to embark on its current hiking cycle. (We all know what followed—an epic downturn for bonds and stocks.)
Friends and family are blowing up my phone (and this time, it’s not just about baby pics). They’ve noticed gold’s rally to new highs – and they want to know whether to buy physical gold or an ETF — bars or coins.
The greenback doesn’t know which way to go, as FX markets offer traders little in the way of breakouts.
Instead of reviewing the chopfest, playing devil’s advocate, and weighing the lack of evidence for a near-term directional bias, let’s turn to a trending market for insight into the dollar.
Spoiler alert: It’s shiny, yellow, and trading at new all-time highs.
Yes, I’m referring to Gold.
Gold and the US dollar hold a classic intermarket relationship — an overt negative correlation.
As I reviewed the charts this weekend, another pattern emerged between the two.
I decided to offset Gold ahead of the dollar by roughly two to four years. After adjusting the charts, I landed on setting Gold forward by 130 weeks (approximately two-and-a-half years).
Gold is up for the sixth day in a row – and it looks like this week’s breakout might be the real deal.
If it is — and gold continues to rip — it’s only a matter of time before copper breaks out too.
Check out the overlay chart of gold and copper futures:
Where gold goes, copper follows. Or perhaps they simply enjoy similar paths.
The rhyme or reason makes no difference. During a commodity bull run, precious and industrial metals will enter a broad markup phase. Gold will not take off on a rip-roaring rally without copper by its side.
Bitcoin is screaming its way back to the former all-time highs. Crude is printing multi-month highs. Even gold is breaking out to new all-time highs after going nowhere for years.
