Is world growth in trouble? The action of industrial commodities suggests not. While one can argue about the merits of manipulation of oil, gold and silver few would argue that pure industrial commodities like copper, lead, nickel, and cotton are subject to price manipulation or flamboyant speculation. All four of these key industrial commodities remain in healthy up trends with a series of higher highs and higher lows. The action of these commodities suggests that either world growth or inflation or some combination of the two is for real(very).
In addition to the behaviour of the four industrial commodities themselves is the confirming behaviour of relative trends in equity markets. One of our favourite confirming indicators for the behaviour of industrial commodities is the performance of steel stocks relative to the broad stock market. The graph below confirms the action of industrial commodities and suggests that yes the world is pulling out of the worst recession since the 1930s
Watch the chart above closely, we have found that it leads even the behaviour of Dr Copper. If the charts above are anything to go by we have already seen the bottom of the commodity market. Monkey See Monkey Do!
Commodities should form part of any “balanced” long term portfolio, of course the trick is to figure out just which commodities to invest in at any particular time.
Subscribers to our paid service are privy to our portfolio, sector weightings, and trade history.
Receive these market updates daily with our free newsletter.
