The “talking heads” and “talking fund managers” are suggesting that the rally in commodities is done, unjustified and poised to be reversed.
Silver
Increased Odds of Growth in the US and Abroad
Just when it appeared that the commodity markets were overbought and poised to correct, the US Fed was found to be on-hold “to at least June.”
Growth in the Rest of the World Showing Signs of Improvement
Just when it appeared that commodities were settling back on a deflationary track, leadership surfaced in fresh buying interest in gold, silver, platinum, soybeans, corn and crude oil.
Fed Not Confident in Pace of US Growth
With the Fed taking a pass on hiking rates in September, a reduction in their 2016 and 2017 growth forecasts, and only minimal dissension within their ranks against a steady policy stance, it appears that they are not confident enough in the pace of US growth to make a move at this time.
Commodity Sentiment Was Overdone
We won’t suggest that the recent lows in many commodities are solid, but value-hunt buying of copper assets by Carl Icahn, a $4.00 single-day rise in crude oil prices, and a 1,000-point, 2-day bounce in the Dow suggest that sentiment was overdone on a number of fronts.
What Will Keep China From Becoming the Next Global Headwind?
Evidence of US Growth Has Pushed the Dollar Up
The US economy has bulldogged its way to growth in February, despite adverse weather, ongoing energy sector layoffs, adverse foreign exchange rate action and periodic talk of rising US interest rates.
Negative Sentiment is Overblown!
Recently a talking head on a major television business program was lamenting the ongoing pressure on equities due to the weakness in energy-related shares.
Commitment to a Return to Growth
While the pace of the world economy remains disappointing to most commodity markets, a long list of central banks are exhibiting a commitment to a return to growth.
Continued US Recovery, But Global Economic Sentiment Still Not Strong Enough
The US recovery has continued and Euro zone 3rd quarter growth has been slightly better than some expectations, but global economic sentiment is still not strong enough to temper bearish sentiment toward most commodity markets.