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Energy & Commodities

A New Bull Market is Emerging

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Posted by Peter DeGraaf

on Friday, 26 January 2018 06:13

We’ve all watched in amazement, while the equities markets around the world have risen to new highs.  On Wall Street hardly a week goes by without a new record.  There comes a time however when a sector becomes so overbought, that smart money begins to leave and search for a sector that has been overlooked.   That moment is now at hand, as can be seen in our first chart – courtesy sources listed. 

chart one

This chart compares equities to commodities.  In 1970, 2000 and today, equities have become overpriced, while commodities are oversold and cheap by comparison.  In 1973, 1990 and 2008, oil and commodities became overbought and investors sold commodities and bought stocks.  If history repeats (and it often does), we are about to witness a massive switching from equities into commodities.  This trend may or may not include oil, since it is already in a bull market, but because of ongoing demand in Asia it will include such items as natural gas, copper, lithium, vanadium, zinc, and cobalt, and the stocks of the companies that mine and produce these commodities will be in great demand. 

http://www.goldseek.com/news/2018/1-25pd/chart%20two.jpg

This chart courtesy Zerohedge.com shows the average number of days in the US stock market between occasions where the index drops 5% or more is 92 days, all the way back to 1929.  In the mid-1960s there was a stretch without a 5% correction for 386 days.  In the mid 1990s the index went 394 days without a 5% correction.  And now (as of Thursday Jan 25th) we have gone a record 399 days without a 5% pullback.  So The S&P has NEVER been this over-valued, NEVER been this overbought, and NEVER gone this long without even a minor correction.   Odds are.....



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Energy & Commodities

Sentiment Indicates Extremes of Emotion for Lots of Commodities

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Posted by Bob Moriarty via Streetwise Reports

on Friday, 26 January 2018 05:55

Goldbullbear630Bob Moriarty of 321 Gold discusses the role of sentiment in the commodities markets and what it means for investors.

We have an interesting situation where a number of commodities are pressing at sentiment extremes all at the same time. Since the S&P and Nasdaq are both US stock market indexes, it is perfectly natural for their sentiment readings to be similar. After all, the indexes are alike in that they are bundles of different shares. In the same way, you can reasonably assume that the DSI for gold and silver to be close, they are both precious metals.

....continue reading HERE

 



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Energy & Commodities

Run with the Bulls … Especially These Four!

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Posted by Sean Broderick - The Edelson Institute

on Tuesday, 23 January 2018 06:38

On the seventh day of the seventh month in the north of Spain, you will see about 3,000 men — some old, mostly young, all brave — gather in the town of Pamplona.

They are there for the nine-day Festival of San Fermín. They are there to run with the bulls.

Running with the bulls at Pamplona isn’t for the lily-livered. Ernest Hemingway described it this way: “It’s like being shot at, and missed!”

But now, you don’t have to risk a horn though the guts to run with the bulls. What’s more, you can make a mountain of money, doing it, too.

I’m talking about the great, big, snorting bull market right in front of you …

The bull market in commodities is pawing the ground and ready to roar. Just look at this chart of the Thomson Reuters Commodity CRB Index. Or the CRB Index (NYBOT: CRB), for short.

crb

There are many kinds of bulls in Pamplona. And the CRB Index is comprised of 19 different types of commodities: aluminum, cocoa, coffee, copper, corn, cotton, crude oil, gold, wheat. But its weighted toward energy (33%).

The important point is that ALL the bulls are running. Some will run faster; some will run slower. If you can grab on to a fast bull, you can go very far indeed.

How far? This cup-and-handle pattern on the chart gives us a minimum target that is 11% higher from recent prices.

Stocks that are leveraged to commodities can do much better.

Now, what if I told you there is a massive force that is putting Tabasco under the tails of these bulls? It’s a potent mixture … one that could spur these bulls to run further and faster than many dream possible.

It’s in this chart right here …



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Energy & Commodities

You'll Want to Read This Living Legend's Thoughts On Copper

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Posted by Robert Friedland via Frank Holmes

on Tuesday, 23 January 2018 00:00

COMM-robert-friedland-frank-holmes-shaft-01192018Last week the U.S. Global Investors office was visited by a living legend in the junior mining industry, billionaire founder and executive chairman of Ivanhoe Mines, Robert Friedland. In case you don’t know, back in the mid-1970s, Robert was caretaker of an apple orchard south of Portland that one of his buddies from Reed College would often visit. That buddy’s name was Steve Jobs, who later went on to found a little company he named—what else?—Apple.

Before Robert and Steve Jobs began palling around, Jobs was known as shy and withdrawn. It was Robert who taught him his skills in what’s been described by many as “reality distortion.” Having seen numerous speeches by Robert over the years, I can attest to his masterful ability to utterly command a room of hundreds with his electric charisma. Some of that charisma must have rubbed off on Jobs, helping the future iPhone innovator evolve into the shrewd, larger-than-life business leader he’s celebrated as today.

Robert’s “reality distortion” was on full display during his visit. I was pleased and honored, as were my U.S. Global team members, to have the opportunity to hear his unique insights on a wide range of issues, from the debilitating smog in Delhi, India; to China’s efforts to become the world’s leading electric vehicle (EV) economy; to Ivanhoe’s development of the Kamoa-Kakula Copper Project in the Democratic Republic of Congo, independently ranked as the largest high-grade copper discovery in the world.

Robert made a very compelling case for Kamoa-Kakula, which he calls “the most disruptive Tier One copper project in the world today.” In its first year of production, its average copper grade is estimated to average an ultra-high 7.3 percent. Because the site is flat and uninhabited, and wages are paid in local currency, the cash cost for the life of the mine is projected to be a low, low $0.64 per pound of copper. As of my writing this, copper is priced at $3.20 a pound, so the margin is significant. After an initial $1.2 billion in capital costs to develop the project, the company expects a payback period of only 3.1 years.

It’s all a very attractive proposition.

Robert Friedland: You're Going to Need a Telescope



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Energy & Commodities

Crude Oil - Sharp PullBack In Progress

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Posted by Nadia Simmons & Przemyslaw Radomski

on Friday, 19 January 2018 05:31

Who Will Take Control in Oil Market? #2

Although the EIA weekly report showed that crude oil inventories dropped for a ninth straight week and distillate stockpiles fell more than expected, U.S. production outweighed positive news. But did yesterday price action change anything in the technical picture of black gold?

Yesterday’s report showed that crude inventories dropped by 6.9 million barrels easily beating expectations for a decrease of 3.5 million barrels. This significant decline was mainly led by a record drawdown of 4.2 million barrels at the U.S. storage hub in Cushing, Oklahoma. What’s interesting, it was the largest weekly draw since 2004. Despite this bullish fact and a decline in distillate stockpiles, U.S. crude oil production rose 258,000 barrels per day to 9.75 million bpd last week, which means that the barrier of 10 million bpd could be broke quite easily in the coming week.

This also suggests that we may see short-lived moves in both directions before the release of another government report as investors may want to wait for a significant fundamental factor that would sink the price of black gold before opening big short positions.

Nevertheless, such a pro-bearish signal that could trigger a move to the downside may also be today's Baker Hughes report. If it shows a bigger increase in the number of oil rigs, oil bears will likely react before today’s market closure or on Monday – similarly to what we saw in the past.

Before we see how the number of oil rigs changed in the recent week, let's check how yesterday's price action influenced the technical picture of crude oil.

Crude Oil’s Technical Picture

The long-term hasn’t changed much since our Wednesday alert was posted, therefore, if you haven’t had the chance to read about the broader perspective, we encourage you to do so today. Today, just like yesterday, we’ll focus on the daily chart (charts courtesy of http://stockcharts.com).

2018-01-19-wtic-D

From today’s point of view, we clearly see that the overall situation in the very short term also hasn’t changed much, because crude oil wavered the second day in a row, which resulted in another doji candle. Taking this fact into account, we believe that what we wrote yesterday remains up-to-date also today:



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