Monday, April 26, 2021

print-icon Commodity Prices Reach 25-Year Inflection Point!



This may mean nothing, but we have entered a time of significant economic restructuring.  A lot of loose cash is finding a home.  That always put pressure on commodities.  Yet it is only playing musical chairs with no leveraging.


The current and present problem is that interest income is way too low and insufficient to draw down the money supply.  Yet the only solution for the powers that be that they can imagine is to print more cash.

There is now a dearth of useful earning investments for all that cash out there. 



Commodity Prices Reach 25-Year Inflection Point!

BY KIMBLECHARTING

MONDAY, APR 19, 2021 - 8:27


https://www.zerohedge.com/news/2021-04-19/commodity-prices-reach-25-year-inflection-point

Commodities have been the talk of the town over the past several months, with grains, energy, and metals reaching new multi-month highs over the 12 months.

And this has lead to concerns over input costs… and inflation.



That’s where today’s chart comes into play. It is a 25+ year “quarterly” chart of the Thomson Reuters Core Commodity Index.

As you can see, commodities have been in a broad downtrend channel since peaking in 2007-2008. As well, the 25-year stretch has produced an important support/resistance pivot line (marked by red & green arrows).

So why does this matter to the Commodity Index and several select commodities showing strength?

Because the current 5-quarter rally in commodities is testing this important pivot (now resistance). And at the same time, it is testing the top of its 13-year falling price channel at (1).

If resistance holds, inflation may be held in check and bonds may experience a bear market rally. But if commodities breakout, then inflation concerns will continue to rise, and select commodities showing relative strength will continue higher. Stay tuned!


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