Gold, commodities and reflation

World Gold Council/Johan Palmberg

Repost from 3-25-2021

“A commodity rally began in Q2 of 2020, sharply on the heels of the COVID-19-driven broad market sell-off. It started with metals, followed by energy, and, by the summer, agricultural commodities had joined in. Investors have waited more than a decade for this type of commodities rally but perhaps their patience is about to be rewarded. The recent market moves – between August 2020 and February 2021 – now rank in the top 5% of six-month moves since 1971 and, with a 30-year low as a base, this suggests they could have further to go.”

USAGOLD note: The World Gold Council’s Palmberg offers solid statistical evidence and charts to back up claims from several top-notch analysts that we have entered a secular bull market in commodities. He says that gold’s “underperformance” thus far is consistent with other episodes of reflation in that a strong rise in the price of gold preceded the commodities runups. In past episodes, he says, gold has played catch up with commodities in the second or third year of the uptrend.

Chart courtesy of TradingEconomics.com • • • Click to enlarge

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