Articles

Is the Commodities Prices at the Verge of Turn Around

21 Jul, 2020
Category: Financials
Tags: Precious Metal

Geopolitical risk, macroeconomic policy, and under investment due to prolonged low commodities price over the years has created the best environment for commodities prices to move.

This debt crisis and plunge in economic activity led to economic depression, which led to aggressive easing by the Fed and pushes the interest rates hitting 0%, the printing of a lot of money, and the devaluing of the dollar, which was accompanied by rises in gold prices, stock prices, and commodity prices.
 
Because the monetary policy caused asset prices to rise and because compensation didn't keep up, the wealth gap widened, a conflict between socialists and capitalists emerged, and there was the rise of populism and nationalism globally.
 
Simultaneously, the geopolitical conflicts between the major power intensified.
 
This is not a description of the past 10 years, it is the history of the year 1930 to 1939. (Excerpted from Ray Dalio's Paradigm Shift) It is surprising to see that history always repeats itself.
 
In 1940, gold and commodities are the best performing asset, class. With the prolonged bear market of commodities over the past 7 years, will it bounce back strongly like a spring that has been compressed for a long period? Only time will tell.

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