COMMODITY CORRECTION AHEAD’ – ‘PAUSE WITHIN INFLATION-POP’ CYCLE
We’re pleased to announce the publication of WaveTrack’s annual 2021 mid-year video updates of medium-term ELLIOTT WAVE price-forecasts. Today’s release is PART II, COMMODITIES – Part I was released last month and Part III will be published in late-July
• PART I – STOCK INDICES – out now!
• PART II – COMMODITIES – out now!
• PART III – CURRENCIES & INTEREST RATES – coming soon!
What is the Commodity Super-Cycle?
The Commodity Super-Cycle beginning from the Great Depression lows of year-1932 ended in 2006-08. Since then, a multi-decennial corrective downswing has begun a new deflationary era but with pockets of rising inflationary pressures.
Commotidies – Rising Inflationary Pressures
One of those pockets of rising inflationary pressures resumed in early 2016 but gained pace this year in 2021. However, it is set to surge higher through to a final peak due in 2023/24. This is the final phase of the ‘Inflation-Pop’ cycle.
But like all uptrends, including inflation, they are punctuated by intervening corrections – one of those corrections is set to begin NOW! Commodities have traded exponentially higher since the pandemic low of March ’20 but have reached interim upside price levels. Especially, since sentiment is euphoric whilst Elliott Wave patterns show a uniform completion to last year’s advances. This can be seen in Base Metals, Energy but also in Agriculture and Food. A 6-month correction lies directly ahead. Only afterwards does the inflation/price uptrends resume through 2022/2024.
Base Metals
A 6-month corrective downswing is about to get underway. Copper and Aluminium have seen the far greater advances from the pandemic lows of March ’20 relative to the other base metals. Copper has just completed its intermediate degree 3rd wave uptrend with a 4th wave correction of -29% per cent underway. Aluminium is approaching a peak for primary wave A with wave B’s correction -24% per cent set to begin. Lead is completing its 1st wave uptrend with a significant corrective pullback set to begin lasting through year-end, a decline of minimum -18% per cent. More about Zinc, Nickel and Tin prices in our latest EW-Commodities Video!
Base Metal Miners
The benchmark XME Metals & Mining index (ETF) is engaged in a five wave diagonal uptrend from the 2016 lows. A correction is expected over the next several months within its 3rd wave of -40% per cent. WaveTrack’s Commodities Video contains Elliott Wave charts of BHP Billiton, Freeport McMoran, Antofagasta, Anglo American, Kazakhmys Copper, Glencore, Rio Tinto, Teck Resources and Vale explaining in details what the next price move might be.
Precious Metals
Gold is set to continue trading lower from last August’s high of 2072.12 as part of primary wave 4’s correction. Downside targets remain towards 1600.00+/-. Gold continues to trade in negative-correlation to the US$ dollar index which is itself pushing higher from January’s low into a corrective rally, lasting into October/November. Longer-term upside targets remain towards 2472.00+/-. Silver continues to trade into a sideways 4th wave triangle from last August’s high of 29.86 – next downside targets remain towards 21.74+/-. Longer-term, upside targets remain towards 38.60+/-. Alternate counts are more bullish, towards 65.75+/-. Get insights into Platinum and Palladium forecasts in WaveTrack’s EW-Commodities Video.
Precious Metal Miners
The benchmark GDX Gold Miners index continues its corrective decline from last August’s high of 45.78 – downside targets towards 27.87+/-. XAU Gold/Silver index is set to extend last year’s correction targeting levels towards min. 116.17+/-, max. 109.37+/-. This corrective theme is repeated for many other gold and silver miners including Newmont Mining, Barrick Gold, Agnico Eagle, AngloGold Ashanti and Fresnillo Silver. More information about the Precious Miners long-term outlook can be found in this latest EW-Commodities Video!
Energy
The star performers in the commodity sector have been Crude and Brent oil. More about Crude Oil, Brent oil, XLE Energy and XOP Oil & Gas indices prices in our latest EW-Commodities Video!
Monetary & Fiscal Stimulus
Monetary and fiscal stimulus remains at unprecedented historical levels – the U.S. leads the world in both aspects – the Federal Reserve has bought $982 billion of mortgage bonds since March 2020, and currently plans to keep buying at least $40 billion each month. Those purchases, along with the Fed’s monthly purchases of $80 billion of treasury debt aims to hold down long-term borrowing costs to stimulate the economy as it recovers from the effects of the pandemic. See graphics Fig #1 – #3.
Fig #1 – Covid Stimulus Package – Source: Statista
Fig #2 – Monetary Bazooka – Source: Goldman, J.P. Morgan, Reuters, Ritvik Carvalho, Tommy Wilkes
Fig #3 – Fiscal Firepower – Source: Goldman, J.P. Morgan, Reuters, Ritvik Carvalho, Tommy Wilkes
Meanwhile, U.S. president Joe Biden has paved the way for his fiscal stimulus programme of $1.9 trillion dollars last March and just last month, has signed off a new infrastructure bill of $1.2 trillion dollars which is designed over an eight year period – it includes $109bn for roads and bridges, $66bn for railways, $49bn for public transport and $25bn for airports – that’s bullish for commodities!
The president wants to enact another, roughly $6tn spending package that would roll in his party’s priorities on climate change, education, paid leave and childcare benefits. And that’s just America! There are similar programmes all over the world, including Europe, China, Japan and elsewhere. Japan’s stimulus is so out of control, it now amounts to 56.09% per cent of its total GDP – unsustainable!
No wonder inflationary pressures are being stoked higher.
Inflationary Pressures Inevitable
The Federal Reserve has been watching how long-dated treasury yields have been trending strongly higher this year, widening the curve as it attempts to maintain its low-interest-rate policy. It had made several statements over the last months, saying inflationary pressures were ‘transitory’ in an attempt to halt the rise. The only other option would be to begin ‘yield curve control’ like the Bank of Japan – not desirable at all. The markets didn’t believe a word of this with bond fund managers increasing their short positioning as the latest Personal Consumption Expenditures (PCE) index, the key measure of the Fed’s inflation gauge surged higher.
US10yr treasury yields peaked in March at 1.774% and have been declining since to 1.245%, forcing bong managers to short-cover their positions amid a re-assessment of the inflation prospects. Ironically, in June’s Federal Reserve meeting, Chairman Jerome Powell announced a policy change, making a U-turn on inflation estimates, employment, the timing of a tapering of bond purchases and interest rate hikes. The Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March ’21 projection. Therefore, it also shortened the time frame of interest rate hikes indicating two increases by end-2023. See graphic here:
Fig #4 – Stronger Inflation, lower unemployment – Source: Federal Reserves Summary of Economic Projections
Yes, inflationary pressures are inevitable and likely to continue trending higher right into the final peak of the inflation-pop cycle due in 2023/24. As a result, a shorter-term a pause also seems inevitable basis the Elliott Wave patterning across several key commodities like Copper, Crude oil, even Agricultural commodities and Foodstuffs.
Bullish Sentiment
Winding the clock back to the time when the coronavirus pandemic hit, commodities were under-invested by fund managers globally – see graphics here:
Fig #5 – Global Fund Manager Survey – Source: BofA
Fig #6 – Global Fund Manager Survey June 2021 – Source: BofA
In the March 2020 Global Fund Manager survey conducted by Bank of America, commodity exposure was shown to be at the lowest levels not seen since 2015 with energy in last position in the asset table. That certainly turned out to be a contrarian bullish signal. Fast-forward to today, and you’ll see commodity exposure has flipped 180 degrees and is now at the summit of the league table. From an Elliott Wave perspective, that’s another contrarian warning signal to expect a potential dip in prices over the next several months.
New Commodities Mid-Year 2021 Video – PART II/III
We’ve amassed over 109 commodity charts from our EW-Forecast database in this mid-year 2021 video. Each one provides a telling story into the way Elliott Wave price trends are developing as a ‘COMMODITY CORRECTION AHEAD’ with a ‘PAUSE WITHIN INFLATION-POP’ CYCLE’ development.
We invite you to take this next step in our financial journey with us. Video subscription details are below. Just follow the links and we’ll see you soon!
Most sincerely,
Peter Goodburn
Founder and Chief Elliott Wave Analyst
WaveTrack International
Commodities Video Part II
Contents: 109 charts
Time: 2 hours 42 mins.
• US PCE Inflation
• US Real Yield
• Food and Agriculture Index
• Lumber
• CRB-Cash index
• US Dollar index + Cycles
• Copper + Cycles
• Aluminium
• Lead
• Zinc
• Nickel
• Tin
• XME Metals & Mining Index
• BHP-Billiton
• Freeport McMoran
• Antofagasta
• Anglo American
• Kazakhmys Copper
• Glencore
• Rio Tinto
• Teck Resources
• Vale
• Gold + Cycles
• GDX Gold Miners Index
• Newmont Mining
• Amer Barrick Gold
• Agnico Eagle Mines
• AngloGold Ashanti
• Fresnillo Silver
• Silver + Cycles
• Silver/Copper Correlation
• XAU Gold/Silver Index
• Gold-Silver Ratio
• Gold/Platinum Spread
• Platinum
• Palladium
• Uranium
• Crude Oil + Cycles
• Brent Oil
• XLE Energy SPDR
• XOP Oil and Gas Index
• Natural Gas
How can you purchase the video?
1. Contact us @ services@wavetrack.com and ask for a PayPal payment link (please state if you like to purchase the Commodities Single video or the Triple Video?).
2. Ask for an individual credit card payment link (in case you do not with to pay via PayPal).
3. Simply pay online via VIMEO. CAVEAT! Vimeo does not allow PDF uploads – if you like the PDF report with the charts you can still contact us @ services@wavetrack.com with your purchase email from VIMEO and we will, of course, make it avaiable to you.
VIMEO – COMMODITIES VIDEO purchase here!
Here is the link to our STOCK INDICES Mid-Year Video Part I published on vimeo.
We will publish the Vimeo link here and/or you can follow us on VIMEO now to receive future updates.
*(additional VAT may be added depending on your country – currently US, Canada, Asia have no added VAT but most European countries do)
We’re sure you’ll reap the benefits – don’t forget to contact us with any Elliott Wave questions – Peter is always keen to hear you views, queries and comments.
Visit us @ www.wavetrack.com
We’re sure you’ll reap the benefits. Don’t forget to contact us with any Elliott Wave questions. Our EW-team is always keen to hear your views, queries, and comments.
Visit us @ www.wavetrack.com
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