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The Great Rotation: A Resurgent Commodities Supercycle
As Commodity prices continue their upward surge, many of the world’s leading economists are calling the beginning of “the Great Rotation” – the point when traders finally rotate out of sharply declining Equity markets into the booming bull market taking place in Commodities.
Talk of the Great Rotation has occasionally made its way into Wall Street analyst’s notes, since the middle of 2020. But now with the Dow Jones Industrial Average, Nasdaq 100 and S&P 500 officially in correction territory – having given up all of their gains for the year – it is now being talked about with increasing frequency.
As we transition through the final quarter of the year, 2023 is now firmly on track to be a third consecutive year that has seen a total of 27 commodities ranging from metals, energies to agriculture tallying up astronomical double to triple digit gains – outperforming every other asset class out there.
And this could just be the beginning!
Earlier this quarter, a long list of the world’s most powerful Wall Street banks raised their price forecasts for the year ahead – stating that “we are now moving into the next phase of the Commodities Supercycle”.
And they definitely weren’t wrong.
This month, WTI Crude Oil breached $92 a barrel – tallying up a whopping gain of 41% since mid-June. While, Brent Crude Oil skyrocketed above $95 a barrel to hit a fresh 2023 record high. Over the last three months, the world’s most traded Oil benchmark has racked up a stunning gain of over 49% from its 2023 lows.
Energy and Gold Prices Skyrocket Amidst Global Uncertainty
Elsewhere in the energy markets, Diesel prices have soared above $140 a barrel to notch up a spectacular gain of more than 75% since mid-June. Meanwhile, Natural Gas prices on both sides of the Atlantic have been on a tear with European gas prices surging 52% this month, while U.S Natural Gas prices have scored a sizable gain of over 15%, this week alone.
You certainly cannot talk about Commodities without mentioning Gold – And that’s because the precious metal has been on a parabolic run since the Israel-Hamas conflict began on October 7.
The precious metal has been on an unstoppable run, rallying from near the $1,800 level at the beginning of October to a three-month high within striking distance of $2,000 an ounce – not once, not twice, but on multiple occasions this month.
The bullish momentum has also split over into Gold priced in other currencies such as British Pounds, Euros, Australian Dollars, Chinese Yuan and Japanese Yen – sending prices skyrocketing to all-time record highs.
During times of economic and geopolitical uncertainty, finding a safe place to store money becomes particularly important, which would explain why Commodities are everyone’s favourite trade.
Not only do Commodities add diversification, but they also act as safe-havens and provide the most crucial benefit of all – high returns in a rapidly changing macro-driven environment, just like the one we find ourselves in right now!
Commodity Price Forecast
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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