Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19
Central Banks’ Gold Buying and Repatriation Spree - 28th Nov 19
Another Precious Metals’ Reversal Coming Right Up! - 28th Nov 19
Stock Market 100% Measured Moves May Signal A Top - 28th Nov 19
Don’t Look for Investing Advice in the Media - 28th Nov 19
Why You Should Buy Trailer Park Stocks - 28th Nov 19
Will YouGov General Election Forecast 2019 be as Wrong as their REAL Forecast was for 2017? - 28th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Gold, Oil, Copper... Commodities Breakdown

Commodities / Commodities Trading Dec 09, 2014 - 02:54 PM GMT

By: Harry_Dent

Commodities

I have been commenting on how the CRB commodity index – including oil, gold and copper – have been trading in a sideways pattern for the past three years and that at some point they would break down.

The break down just happened. Oil broke below support at $75 to $80, copper broke below $2.90 to $3, gold broke below $1,180 and the CRB broke below $270.


But just when you would normally think they would break down sharply out of such long trading ranges, these commodities are now holding and look like they may have bottomed for now. Gold got extremely oversold, the most in years, and now looks likely to rally back towards $1,300 to $1,380 in the months ahead.

This is what these now trader-dominated bubble markets are doing. Traders take things up higher than anyone would think and then take them below support to scare every one out, then they buy and drive prices up again.

They’re intent on screwing everyone. The central banks are enabling them with zero interest rates which in turn allows them to leverage at unprecedented rates and producing a much high impact on the markets.

This makes these the trickiest markets I’ve ever seen to call short-term.

Oil’s Landscape

Oil’s plunge has been the most dramatic, as it was back in the crash of 2008 — $147 to $32 in just over four months. I’ve never seen a market fall that much… that fast.

It was caused by the high leverage of such increasingly dominant traders and hedge funds. And it was steep because they had to sell due to massive margin calls.

Oil has traded between $114 and $75 and finally broke down more sharply than other commodities, hitting $64 on December 1. It’s traded between $63 and $68 since then.

Oil is extremely oversold right now and has minor support from the early 2010 low around $64. After that there’s no obvious support on this chart. The next support is at $32, the late 2008 low… definitely not a pretty picture.

Saudi Arabia thinks oil will settle down around $60. Maybe near term, but that’s not what this chart is suggesting just down the road.

The most likely scenario would be a rally back to $75 to $80, then another crash sometime in 2015 down to as low as $32. I see oil ultimately bottoming around $10 to $20 in the years ahead.

But that could only happen if global growth slows much more and especially in emerging countries. A new China momentum indicator suggests China will slow to 4% to 5% over the next year, lower than its 6% low in 2009.

This can’t be good for the global economy and would strongly suggest another crash in stock prices as well.

Our view is that falling oil and commodity prices are a sign of the slowdown and deflation crisis ahead — not a good sign this time around.

In a deflationary environment, falling commodity and oil prices is not a good thing even though there are obvious benefits to consumers in the U.S., developed countries and China. Likewise, rising oil and commodity prices aren’t good in an inflationary environment (think about the one in the 1970s) even though such prices do benefit emerging countries and commodity exporters.

And what does this do to the fracking industry in the U.S.?

That outcome won’t be good at all, especially as some producers will go under at current prices and many more below $58 a barrel. Energy companies are responsible for 20% of the junk bond debt in the U.S.

That’s the whole purpose of Saudi Arabia not cutting production with the increasing excess oil capacity. It wants to kill off its fracking and less-efficient oil-producing rivals.

If oil does rally in the coming weeks or months and then turns around and starts to collapse again and breaks back below $63 — it’ll be downhill from there.

We should be watching out for a potential global stock crash.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2014 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules