"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 44 mins Best Buy Drops Telecom Giant Over National Security Threat
  • 2 hours The Pros And Cons Of The Federal Interest Rate Hike
  • 3 hours Good News For Gold Bulls Despite Interest Rate Hike
  • 5 hours Trump Hits China With $50 Billion In Tariffs
  • 6 hours Russian Gold Reserves Hit Record High Amid Rising Tensions With West
  • 7 hours Stocks Pull Back Following Interest Rate Hike
  • 23 hours Will Regulatory Rollbacks Make Banks 'Too Big To Fail?'
  • 24 hours Elon Musk’s $2.6 Billion Tesla Challenge
  • 1 day Tech Giants Could Be First Victims Of U.S. Trade War
  • 1 day Dow Gains Despite Fed’s Rate Hike
  • 1 day The Biggest Threat To Chinese Oil Futures
  • 1 day Spending Bill Could Cause U.S. Debt To Soar To 99% Of GDP
  • 1 day Precious Metals Slide Ahead Of Fed’s Interest Rate Decision
  • 1 day China’s Soft Power Grab May Be Bad News For Emerging Economies
  • 2 days The Secretive Wall Street Firm Betting On Bitcoin
  • 2 days ‘Data Is King’: The Oil Industry’s Next Most Valuable Resource
  • 2 days Google Invests $300 Million To Combat Fake News
  • 2 days Zuckerberg Dodges A Bullet As Facebook Loses Billions
  • 2 days Tesla Tumbles As Investors Lose Patience
  • 2 days Are Alt-Coins On The Verge Of A Break Out?

CRB Indices Say Ome More Leg Up

While the number of articles calling for a major top in the commodities increases with the fears of recession, the charts tell a different story.

Of course, it is natural to expect hard asset prices to take a knock if recession does come and consumers tighten their discretionary spending. However, though the fundamentals may be slowly brewing for a recession, as ever it is a matter of timing rather than merely calling up the fundamentals as expert witnesses.

Indeed, economists are notorious for failing to see recessions coming in advance so one may also argue that no recession is forthcoming if economists say it is coming! With that I want to show two charts courtesy of Reuters and the Commodity Research Bureau who have wisely collated the data on various commodities since 1947 onwards.

The first is their chart for the CRB Precious Metals Sub Index. I show it below with a clear Elliott wave in progress.

A very nice and clear impulse wave is in progress and has been so since 2001. Waves 1 and 3 have dutifully completed and now as this index makes new all time high from their peak in 1980 we anticipate wave 5 to be at least as strong as the preceding waves as investors pile in for one final fling. Since waves 1 and 3 covered nearly 200 points each, we can see wave 5 at least hitting 900 if not 1000. Moreover, waves 1 and 3 lasted about a year and a half each so we anticipate this wave will ride well into next year. As if to give its vote of sympathy to this pattern, the CRB Energy Index is also indicating this bullish pattern as we show below.

The impulse wave for this energy bull market is I would say even clearer with more marked counter moves for waves 2 and 4 (I think "counter" is a better word than "correction"). The textbook strength of wave 3 is clearly evident here but we suspect wave 5 could be just as bullish as a final blow off ensues. Wave 5 is well underway for energy commodities and again the relative size of the waves suggests a run well into 2008 again.

So despite fears of recessions or irrational exuberance in the commodity markets, we envisage one final profitable leg up for precious metals and energy before we enter a rather protracted period of counter moves.

Further analysis of silver can be had by going to our silver blog at http://silveranalyst.blogspot.com where readers can obtain a free issue of The Silver Analyst and learn about subscription details. Comments and questions are also invited via email to silveranalysis@yahoo.co.uk.


Back to homepage

Leave a comment

Leave a comment

Sign Up For The Safehaven Newsletter