Monday November 26, 2012
by Mary Anne and Pamela Aden, editors The Aden Forecast
Historically a commodities bull market tends to run for well over a decade, more like two decades. This one is only 10 years old, which means it has more years to go.
Most interesting, the indicator is at a major low area for the first time since 2009... a low area that has generally coincided with the lows in commodities over the last several decades.
Could this be saying the massive stimulus programs will be bullish for commodities, and the deflationary environment will subside for now? Are the latest economic indicators out of the U.S. and China the start of something good?
The markets are telling us something... We all know how much influence the Fed has had on the market since 2008 when QE1 was put into place, so it is indeed a possibility.
We recommend buying gold and silver, but if you already have all of your positions purchased, then just sit tight. Gold and silver look poised to rise in a powerful intermediate rise. And silver still looks like it will outperform gold.
We also recommend having more of your metals positions in coins or bars. We also still like the ETFs too -- SPDR Gold Trust (GLD), iShares Comex Gold (IAU) and iShares Silver (SLV).
Copper is a great global economic barometer; it often points the way for the world economy. In 2009, for instance, they hit bottom and then rose strongly.
So, what happens next? The 2011 highs and lows are the key levels to watch because the break out will tell us the next direction.
They would trigger an extremely bullish sign for the global economy if the upside is surpassed. On the other hand, a break down below the 2011 lows would be negative, signaling a recession is likely, or that the global slowdown gets worse.
As long as the Dow Industrials, Nasdaq and the S&P 500 stay above 12500, 2840 and 1320, respectively, the major trend will remain up. Below these levels would be a bearish signal.
If the big picture of the CRB index is any clue, it looks like the break out will be on the upside. This means that now is the time to take advantage and buy -- ideally on weakness.
Learn more about this financial newsletter at The Aden Forecast.