Justin’s note: Today, we hand the reins to Casey Research’s in-house commodities expert, David Forest, who says commodities are primed for an explosive bull run.
In fact, as you’ll see, this could be their biggest rally in 50 years… and now is the time to take advantage.
Read on to get all the details, including a “one-click” way to get exposure today.
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Why Commodities Are Poised for Their Biggest Rally in 50 Years | |||||||||||
By David Forest, editor, International Speculator
It’s the most important chart in the resource space today…
And it’s telling us that commodities are primed for their biggest rally of the last 50 years.
Why is this the best setup for commodities in half a century?
• Take a look below…
The chart I’m referring to tracks the S&P GSCI – which tracks prices for 24 commonly traded commodities – relative to the S&P 500. We’ve labeled a few important events on it…
When the blue line on the chart is rising, commodities are getting more expensive relative to the S&P 500 – a good proxy for the U.S. stock market. When the line is falling, commodities are getting cheaper relative to stocks.
As you can see, when commodities are at historic lows relative to stocks [green circles on the chart], it’s been a great time to buy.
For instance, two entry points for investors in the past were in 1971 – after we went off the gold standard – and in 1999, at the peak of the dot-com bubble. Between 1971 and 1974, the S&P GSCI rocketed 371% higher. And from 1999 to 2008, it shot up 454%.
• The opposite is true, too...
History shows you don’t want to be loading up on commodities when they’re expensive relative to stocks.
For instance, the S&P GSCI was at an extreme high relative to stocks [red circles on the chart] in 1990, at the peak of the Gulf Crisis, when Saddam Hussein’s army was rolling into neighboring Kuwait. That was a terrible time to be a commodities buyer. The S&P GSCI plunged 70% from the end of September 1990 to December 1998.
Another peak for commodities relative to stocks was in 2008, at the start of the global financial crisis. And again, that was a terrible time to buy commodities. From July 2008 to February 2009, the S&P GSCI experienced a 65% peak-to-trough fall.
• If past is prologue, that means commodities are primed for another explosive bull run…
Today, the ratio of the S&P GSCI to the S&P 500 is 0.91. The average ratio going back to 1970 is 3.9.
In other words, the commodities sector is currently 77% below its average price relationship with stocks over the past half-century. And it’s lower, on a relative basis, than it was ahead of the big commodities rallies in the early 1970s and the early 2000s.
There are lots of other considerations when it comes to buying natural resources.
But if you filter out the noise… and just buy when commodities are historically cheap relative to stocks… you’ll do very well indeed.
An easy, “one-click” way to get exposure today is to buy the Invesco DB Commodity Index Tracking Fund (DBC).
It gives you exposure to the 14 most heavily traded commodities.
You only need to invest a little bit of money to take advantage of this historic setup.
Regards,
David Forest
Editor, International Speculator
P.S. After a 24-month investigation, I’m finally ready to reveal the details on the single greatest discovery tool I’ve ever seen.
I call it the “Digital Treasure Map”… and I believe it could single-handedly revolutionize the exploration business – and in the process, unleash a massive wave of new, wealth-creating mineral discoveries.
I’ve traveled over 60,000 miles experimenting with it. I’ve used it in five countries on three continents. And I’m currently testing it in eight more locations. It works. But I want you to see for yourself.
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Saturday, February 2, 2019
CASEY DAILY DISPATCH 02/02/2019
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