A monthly chart of Gold shows the breach of support at $1200/ounce, offering a long-term target of $1000*. Another 13-week Twiggs Momentum peak below zero strengthens the signal. Retracement that respects the new resistance level at $1200 would confirm. Recovery above 1200 is unlikely.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Crude Oil
Crude is also falling — in response to the rising Dollar as well as expanding supply. The long-term target for Brent crude is $60*.
* Target calculation: 90 – ( 120 – 90 ) = 60
…And $50/barrel for Nymex Light Crude. Follow-through below $75 would confirm the down-trend.
* Target calculation: 80 – ( 110 – 80 ) = 50
Commodities
Copper is below its 2011 low of $6800/tonne, reflecting weak demand from China. Follow-through below $6600 would confirm a primary down-trend.
Dow Jones UBS Commodity Index has already broken support at 125, suggesting a test of its 2009 low at 100.
I really like your approach. I’m virtually out of resources apart from od bets like MBN, LOM and AWC. At some point there will be a BIG pick up bounce. This is a very unusual time in trading history Pieter Moeskops (70yo–ie seen a lot of cycles)
Good stuff as usual Colin. Do you believe that $50/barrel Nymex crude will act as a deflationary ballast to the global economy? With this event and historic lows for basic materials, its not exactly party time at the OK Corral, is it?
I see falling crude prices as a massive stimulus for the global economy.
Lower energy prices have a knock-on effect throughout the economy, reducing prices of a number of goods. But my view is that this will not affect aggregate demand. Lower fuel prices mean that consumers will travel more. It also means lower grocery prices. Consumers will spend more, not just on fuel & groceries, but on other forms of consumption. If they save rather than spend, this will lead to higher investment or lower interest rates (or at least less Fed effort to reduce interest rates) all of which should have a positive impact on the economy.
Any chance of charting the iron ore price?
We can’t get iron ore data from our supplier. There are some long-term charts on the RBA website (select Bulk Commodities). If you download the image you can enlarge.