Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold Dips on the Week While Silver Rises Almost 3%
By: Chris Mullen, Gold Seeker Report

Taiga Launches Website, Sets Tentative CSE Trading Date
By: Eagle Plains Resources Ltd.

Economics 101: Who Sets Prices?
By: Alasdair Macleod

Silver Breakout Or Fakeout?
By: Mike Maloney and David Morgan

COT Gold, Silver and US Dollar Index Report - April 20, 2018
By: GoldSeek.com

Gold Nearing Bull Breakout
By: Adam Hamilton, CPA

Surmounting The Greatest Market Threat
By: Deepcaster

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

Turkey Takes Possession of 220 Tons of Gold Repatriated from Federal Reserve
By: Rory Hall

Black Monday II - Repricing of Risk Begins
By: Gordon T Long

 
Search

GoldSeek Web

 
Commodity Crash Points To A Bottom


 -- Published: Wednesday, 18 March 2015 | Print  | Disqus 

Chart 1: Commodities have crashed back to levels seen in 2001 & 2009

CRB Index

 Source: Stock Charts

We have been following the strength of the US Dollar for awhile and its impact on various asset classes throughout the second part of 2014 and the first quarter of 2015. A major story that we have touched on, but not discussed in-depth, is the crash in commodity prices over the last 9 months. Those who follow this blog regularly should probably remember from previous posts that many of the individual commodities are down between 50 to 70 percent from their respective 2011 peaks. But what about commodities as a whole? Observing Chart 1, the most popular of commodity indices tends to be the Thomson Reuters CRB Index.

Over the last 35 years, this level has been very significant. Firstly, commodity bull market that peaked in in late 1980 eventually bottomed out around the 200 level in 1986. This level was later re-tested once again in 1992, during another commodity bear market. Secondly, the major double bottom in commodity prices occurred in 1999 and 2001, both of which saw the 200 level violated only briefly (as a bear trap or a false breakdown). Finally, during the GFC liquidation panic, CRB Index found a support at the 200 level once again, from which prices bounced very sharply.

Today, the CRB Index once again finds itself at the all important 200 level. In other words, the commodity prices are still trading at the same level we saw in 1986, 1992, 1999, 2001 and 2009. If we adjust the CRB Index for inflation, prices are now significantly cheaper relative to the 1986 bottom, even though nominally the index is at the same level. Since this area of historical support is extremely important, in my opinion, there is now above average chance that commodities could start forming yet another meaningful bottom. Mind you, this process could take awhile so patience is very important.

Technical indicators in Chart 1 are extremely oversold by any historical comparison, so a mean reversion is definitely in the cards. At the same time, Chart 2 shows that sentiment on the CRB Index is at rock bottom levels, usually witnessed at major bottoms. Commodities aren't even hated anymore... the truth is majority of the media has totally forgotten about this asset class. Contrarians should look at this asset class very closely. My opinion continues to be that the best way to play commodities is through Precious Metals, and especially Silver.

Chart 2: Sentiment is now extremely bearish similar to '01 & '09 bottoms

Commodities Sentiment

 Source: SentimenTrader (edited by Short Side of Long)

http://shortsideoflong.com/


| Digg This Article
 -- Published: Wednesday, 18 March 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.