Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24
THE GLOBAL WARMING CLIMATE CHANGE MEGA-TREND IS THE INFLATION MEGA-TREND! - 3rd May 24
Banxe Reviews: Revolutionising Financial Transactions with Innovative Solutions - 3rd May 24
MRNA - The beginning of the end of cancer? - 3rd May 24
The Future of Gaming: What's Coming Next? - 3rd May 24
What is A Split Capital Investment Trust? - 3rd May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How High Will Gold Go?

Commodities / Gold and Silver 2017 Dec 05, 2017 - 03:31 PM GMT

By: Harry_Dent

Commodities No. I’m not flip-flopping!

As I told subscribers to our Boom & Bust monthly newsletter in November, I stand by my forecast that gold must still lose about 65% of its current value before we hit the bottom of this latest commodity cycle, around 2020 or 2023. And when the markets unravel, as they must, gold will tumble, just like it did in 2008. It’s NOT a safe haven in a deflationary environment, like it is in an inflationary one!


But I also told them that after this cycle has wrapped up and we head into the upward swing of the next one, then gold will soar, along with several other very specific commodities.

The next iteration of this cycle just ahead should prove to be the biggest boom in commodities yet.

There’s a trick to this though…

The general commodity index (CRB) has one of the most clockwork-like cycles I’ve ever seen. It’s a full cycle of 30 years. But, the commodities within that index don’t cycle as smoothly, some presenting much more up and downside potential than the broader index.

Also, the overarching cycle is much more consistent on the upside than the downside. The tops we saw in 1920, 1949 to 1951, 1980, and 2008 to 2011 are very consistent, right at that 30-year mark, give or take a year.

The bottoms are more variable.

After the 1920 top, commodities bottomed in 1933, trending down for 13 years. However, after the 1951 top, the index only bottomed again in 1968 – 17 years later! And after the 1980 peak, commodities took 21 years to bottom out, although most of the losses occurred into 1986. The first six years of that downward leg of the cycle were brutal before prices wafted more sideways and a bit farther down until 2001.

Despite all of that, the commodities cycle is one of the most reliable in my arsenal. It really doesn’t get better than this on its longer-term cycle for peaks. See for yourself…

The dual 2008/2011 peaks led this commodity bubble burst around the world and looks close to a bottom in the years ahead.

The first peak in mid-2008 was driven mostly by energy, industrial metals, and agriculture. The second peak in early 2011 was thanks mostly to precious metals and some industrial metals like iron ore or copper.

While gold has not yet hit my next target of near $700 an ounce (range of $650 to $750) – and mark my words, it will – I do believe we’re reaching the end of the commodities downturn, which will wrap up likely by early 2020 and by 2023 at the latest. The biggest clue is the 80% crash in crude oil and iron ore.

2023 is the most natural bottom from a 2008 peak, forming a 15-year down cycle. But we may see some signs of new life earlier because this downturn has been so extreme thus far… and because the demographic force of emerging countries will directly impact commodities. They will likely turn up sooner than major developed countries like the U.S.

Regardless, a major commodity boom is set to start between 2020 and 2023, and will run into 2038 to 2040. And, from all indications, it’ll be a major boom. I’m talking as much as 4.8 times, which is bigger even than the largest bubble since the late 1800s into 1980, that clocked in at 3.15 times.

Gold bugs are right. We may well see $5,000 per ounce, but only during the next commodity boom. First gold has some excess weight to shed.

A Warning

Commodities have the most extreme of cycles. That’s why the best traders make their hay in this sector. Sudden changes in weather, or natural disasters like hurricanes or fires, or mining strikes can cause sharp short-term fluctuations, often like an exploding bomb!

That’s why I suggest that you don’t trade alone in this volatile arena. Find someone with a proven system to help guide you.

And here at Boom & Bust we’ll point you in the right direction using my decades of cycles’ analysis and research into demographics and urbanization trends… and Charles’ expertise in value investing!

There are particular commodities that perform best in a world driven more by the fast-growing and urbanizing emerging countries. And that driver really is the key to the next commodities boom.

Although most commodities, from agriculture to energy, go up and down in longer-term, 30-year cycles, there are differences in our ability to ramp up supply (elasticity) when demand accelerates.

It’s easier (and cheaper) to cultivate more land for crops or livestock than it is to drill deeper wells for oil or dig deeper mines to extract the industrial metals like iron ore, coal, lead, nickel, or copper.

So, as the emerging world dominates growth in the next global boom, it will require more basic commodities like rice and corn and rubber. But precious metals, industrial metals, and energy will also have a place.

The best way to forecast such future needs and appreciation potential is to see how different commodities performed in the last commodity cycle boom from around 2001 into 2008/2011.

For the full analysis, and to see the seven other commodities we’re betting on in the next boom, become a Boom & Bust subscriber today.

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 © 2017 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.

Harry Dent Archive

© 2005-2022 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