Is the end of the super cycle in commodities in sight? It seems too soon to come out with a conclusion like that, although things were moving along swiftly over the past few days in a few markets. Oil and gold got the most attention, but many investors overlooked copper which dipped below 3 dollars.
Gold indeed was able to rise significantly, although in a volatile fashion. This happened after the Swiss ‘nein’ on the referendum to repatriate some of the country’s gold. Something that rises after bad news comes out always gets attention, but it is too early to tell whether gold is in the clear.
Not Only Gold Is In The Picture
The fact that Japanese debt also got a downgrade from Moody’s was also in the spotlight, but that was coming. Japan’s debt mountain is tall and the decision to postpone the VAT raise probably was the last piece of the puzzle. Prime minister Shinzo Abe is probably not super happy about the downgrade.
For now a link between Japan and the price of gold is non-existent, as China and India are still the most important countries when it comes to sentiment around the gold price. The economic situation in Japan casts a shadow over commodities, however.
Only when the smoke clears we will be able to see what the actual situation is in the commodity markets. Energy, oil in the first place, and base metals seem to be down and out, but gold should be able to show the way. A recovery in precious metals should help the general sentiment.
