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Commodities Video 2020 – Q1 Sell-Off – Lift-Off Q2!

by WaveTrack International| January 18, 2020 | No Comments

Commodities Video Outlook 2020 by WaveTrack International www.wavetrack.com

Commodities Video Outlook 2020 by WaveTrack International

Commodities – Q1 Sell-Off – ‘Inflation-Pop’ Lift-Off Q2 Onwards!

THIS REPORT INCLUDES ANALYSIS ON MEDIUM-TERM CYCLES & EQUITY MINERS

We’re pleased to announce the publication of WaveTrack’s annual 2020 video updates of medium-term ELLIOTT WAVE price-forecasts. Today’s release is PART II, COMMODITIES – Part I was released last month and Part III will be published in early-February.

• PART I – STOCK INDICES – out now!
• PART II – COMMODITIES – out now!
• PART III – CURRENCIES & INTEREST RATES – coming soon!

Commodities – Q1 Sell-Off – ‘Inflation-Pop’ Lift-Off Q2 Onwards!

Commodities – Q1 Sell-Off – ‘Inflation-Pop’ Lift-Off Q2 Onwards!

Elliott Wave Forecasts for 2020 – Summary

  • The next stage of the ‘Inflation-Pop’ cycle is about to get underway – it resumed in early 2016, took a pause in 2018/19/(20) and is now set to surge higher in 2020, 2021 & 2022!
  • Prior to surging price rises, some commodities are set to complete 2018’s corrective downswings with one additional but final sell-off into end-Q1 2020
  • The US$ dollar resumed its 7.8-year cycle downtrend in October ’18. An Elliott Wave 3rd-of-3rd wave is set to accelerate lower from end-Q1 2020 onwards. This becomes one of the main drivers that pushes commodity prices sharply higher.
  • Inflationary pressures are forecast resuming this year, in 2020. US10yr Breakeven Inflation Rate has undergone a corrective downswing from the 2018 high of 2.182%. But this is bottoming now around 1.500% to max. 1.480%. A new uptrend is about to begin, indicating rising inflation across many financial sectors, including commodities.
  • The Food & Agriculture Organisation (FOA) reports world food prices surging higher reaching a five-year high last December with the F&A index reaching 181.7. Elliott Wave forecasts depict a long-term 5th wave advance in progress from the grand ‘RE-SYNCHRONISATION’ lows of 2016. Upside targets over the next few years are towards 317.20+/-, an increase of 135% per cent!
  • SHORT-TERM, analysis depicts a 3-month dip in commodity prices, ending sometime into the end of Q1-2020. The Baltic Dry Index has declined since last September’s high of 2518.00 by -69% per cent to 773.00. This is hinting of a weakening in economic activity during the next few months ahead of a bottoming formation and a resumption of the longer-term uptrend.
  • BASE METALS – Copper, Aluminium, Lead and Zinc are all forecast lower through Q1-2020 but then ending entire corrective declines that began in early-2018. From Q2 onwards, base metals resume upward surge to new ‘Inflation-Pop’ record highs.
  • BASE METAL MINERS weaker in Q1-2020, but then ending corrective downswings that began in 2018/19. BHP-Billiton, Freeport McMoran, Antofagasta, Anglo-American, Kazakhmys Copper, Glencore, Rio Tinto, Teck Resources & Vale.
  • PRECIOUS METALS – There’s still an open question whether Gold and Silver began new five wave impulse uptrends from the Nov/Dec.’15 lows or if these price advances are simply counter-trend rallies within secular-bear downtrends
  • GOLD has formed an important peak in early-January ’20, ending a five wave uptrend from the Aug.’18 low of 1160.24 at 1611.37. A multi-month correction is now underway – Silver began an equivalent multi-month downswing from last September’s high of 18.86.
  • GOLD MINERS are expected to outperform bullion during the ‘Inflation-Pop’ uptrend cycle. Newmont Mining, Barrick Gold, Agnico Eagle, AngloGold Ashanti
  • Platinum is bearish through 2020. Palladium is set to test upside targets of 2483.00+/-, max. 2514.00+/-. Then collapse lower
  • ENERGY – Crude oil is forecast lower through Q1 2020 in order to complete counter-trend corrective downswing from Oct.’18 peak of 76.90. Targets below Dec.’18 low of 42.36. Afterwards, begins ‘Inflation-Pop’ surge to new record highs during next few years. Brent oil engaged in similar corrective downswing targeting 43.50+/- but then surging to new record highs

    • Q1 Sell-Off – ‘Inflation-Pop’ Lift-Off Q2 Onwards!

    Secular-bull uptrends in U.S. stock markets that resumed from the financial-crisis lows of 2008/09 are intimately linked to the corresponding price advances in commodity markets. Despite comparable uptrends from those 2008/09 lows, from an Elliott Wave perspective, the definition of an uptrend doesn’t apply to many commodities, whether they’re Base Metals, Precious Metals or Energy contracts like Crude/Brent Oil.

    Whereas U.S. stock markets are still engaged in long-term five wave impulse uptrends that began from the Great Depression lows of 1932, Elliott Wave analysis identifies Base Metals and Energy contracts ending their corresponding Commodity Super-Cycle peaks much earlier, in year-2006/08. Everything that has so far followed is part of a multi-decennial corrective pattern, specifically, an A-B-C expanding flat where wave B allows a push to new record highs. Those B wave advances correspond to 5th wave advances in U.S. stock markets.

    Back in year-2010, we termed this B wave advance as the ‘Inflation-Pop’ cycle because it was destined to trigger several years of rising inflationary pressures, as asset prices were driven higher by central bank’s monetary policy and quantitative easing measures. Fast-forward to 2020, those rising inflationary pressures are about to get another kick higher.

    Commodities and US$ Dollar Outlook

    One contributor that’s expected to drive asset values significantly higher over the next few years is a weakening US$ dollar – see fig #1. There’s a distinct 15.6-year cycle recurrence for the US$ dollar index which has signalled the various peaks and troughs over the past several decades.

    US Dollar Index Cycle - Monthly - WaveTrack International

    US Dollar Index Cycle – Monthly – WaveTrack International

    The last time the cycle peaked was late-2016 when the US$ dollar index traded to a high of 103.82. This is a centrally-translated cycle where peaks and troughs alternate in similar time-intervals of 7.8-years which means the late-2016/early-2017 cycle downturn will last approximately 7.8-years into the next 15.6-year cycle trough due in years 2023/24.

    Basis Elliott Wave analysis dating back to the historical peak of 164.72. This puts the dollar on a crash-course for declines below pre-financial-crisis lows!

    Commodities and Interest Rate Outlook

    Another contributor to rising inflationary pressures will be the triggering of a new uptrend in interest rates.

    The US10yr Breakeven Inflation Rate (TIPS) yield is nearing the completion of a counter-trend downswing that began in early-2018 – see fig #2. This correction was forecast in the 2018 annual Interest Rate report – ‘The recent break for the US10yr treasury yield above the 2017…indicates further upside potential into the end of Q1 ’18, beginning of Q2 targeting 3.360+/-…Once completed, a multi-month corrective decline would then begin, pulling yields sharply lower…The US10yr TIPS Breakeven Inflation Rate Spread indicates an interim peak forming at the same time as treasury yields…This suggests worries over the re-emergence of inflationary pressures will abate for a while…’. – a while has turned out to be almost 2-years!

    Commodities Outlook 2020 - US10yr - USTips 10yr Yield Spread - Weekly - WaveTrack International

    US10yr – USTips 10yr Yield Spread – Weekly – WaveTrack International

    Ten-year treasury yields are expected to undergo another downswing into Q1 2020 before forming an historical base, then trending higher to begin a new 30-year cycle. This could pull the US10yr Breakeven Inflation Rate (TIPS) yield slightly below current levels of 1.500 although only marginally, before trending higher too. The outlook over the next few years is amazing! Upside targets are towards 4.247%!! We’ll explain more in PART III of the annual report, but until then, suffice to know that a primary degree A-B-C zig zag pattern has been unfolding since the end of the financial-crisis of 2008/09.

    Rising Food & Agriculture Prices

    Whilst this annual 2020 Commodities report doesn’t include analysis of grains and soft commodities, we can get an overview of trends from studying the Food and Agriculture Organization (FAO) price index – see fig #3.

    Commodities Video OUtlook 2020 - FOA - Food and Agriculture Index - Monthly - www.wavetrack.com

    FOA – Food and Agriculture Index – Monthly – www.wavetrack.com

    The historical data begins from the 1950’s – there’s a clearly defined Elliott Wave impulse pattern, a primary degree five wave impulse sequence, 1-2-3-4-5 engaged to the upside. This multi-decennial uptrend began primary wave 5 from the June ’86 low of 82.40. It has steadily advanced since, subdividing into an intermediate degree uptrend, (1)-(2)-(3)-(4)-(5) where wave (5) began lifting prices higher from the grand ‘Re-Synchronisation’ lows of early-2016, from 149.30.

    Food and Agriculture Organization Index

    In the last month, the Food and Agriculture Organization (FAO) reported the index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat, and sugar jumped to its highest point since Dec.’14, averaging 181.7 points, up 2.5% on the previous month.

    The cereal price index rose 1.4% to average 164.3 points, led by higher prices for wheat with stronger demand from China and logistics problems following strikes in France. Rice prices were little changed. Vegetable oil prices were up strongly, with the index rising 9.4% to 164.7 points in December. Palm oil prices rose for the fifth month in a row, lifted by biodiesel demand, while soy, sunflower, and rapeseed oil values also increased.

    The dairy price index averaged 198.9 points in December. Precisely, up 3.3% with higher cheese and skim milk powder prices that outweighed lower butter and whole milk powder values. The sugar price index was up 4.8% to 190.3 points, lifted by surging demand for ethanol caused by rising crude oil prices.

    By contrast, meat prices were almost unchanged from November with the meat price index at 191.6 points with higher pig and sheep meat prices balanced by falling beef prices.

    But what does this tell us? Well, from an Elliott Wave perspective, there’s a long way to go before reaching intermediate wave (5)’s ultimate upside target of 317.20+/-. That can only mean one thing – rising prices = rising inflationary pressures.

    Q1 Sell-Off!

    Before commodity prices launch higher, we expect Base Metals & Energy to trade lower during the first-quarter Q1-2020 period.

    Base metals like Copper etc. haven’t quite finished Elliott Wave corrections that began from the early-2018 peaks. Crude/Brent Oil began a three wave, A-B-C corrective downswing from the Oct.’18 highs of $76.90 and $86.74. However, wave C remains in downside progress. This can only suggest some form of economic deterioration. A possible weakness for the first few months of 2020, pulling commodity prices lower to finalise these 2018 corrections.

    Commodities and the Baltic Dry Index

    Commodities Video Outlook 2020 - Baltic Dry Index - Monthly - Elliott Wave Forecast by WaveTrack International

    Baltic Dry Index – Monthly – Elliott Wave Forecast by WaveTrack International

    One leading indicator worth tracking for signs of an economic downturn is London’s Baltic Dry Index (BDI) – see fig #4. The historical data begins from the late-1980’s. It tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities around the world. The BDI began a new uptrend from the grand ‘Re-Synchronisation’ lows of early-2016, from 290.00. Elliott Wave analysis forecasts this advance beginning a decennial A-B-C zig zag upswing. Wave A ended an initial advance into the July ’18 high of 1774.00 – wave B completed a counter-trend decline into the Feb.’19 low and wave C is now engaged in a multi-year five wave uptrend targeting levels towards 543.00+/-. That’s a huge gain over the next several years, reflecting an increase in shipping goods around the world, ergo, rising inflationary pressures.

    But in the last couple of months, a deep 2nd wave correction has unfolded within wave C’s five wave uptrend. It began from the Sep.’19 high of 2442.00 and is still heading lower – so far, a low into early-January of 773.00 reflects a decline of -69% per cent. If this is a leading indicator, then we can certainly expect other hard commodities to fall back during the first-quarter too!

    Precious Metals Outlook

    The outlook for Gold leads our analysis for 2020. Much has been written about its price direction since 2016 when gold rose by +30% per cent, from $1046.45 to $1375.27. When prices broke above $1375.27 in June (2019) last year, every analyst under the sun turned super-bullish. That’s not entirely unexpected – large institutional investors have been sidelined for several years, since gold peaked at $1921.50 back in 2011 – but now, they’re back in force. Only last week (Jan. 10th), the latest COT net speculative long-positioning was at its highest for over 10-years at 322,200 contracts. That’s a warning that a corrective downswing is due to commence.

    The Gold Question

    But the more important question is ‘what is the dominant trend for gold and the other precious metals?’.

    This year’s going to be make or break for precious metals. Whilst the gold mining stocks look set to explode higher later this year (just not now), bullion gold, silver and platinum may struggle to keep pace. The problem is this: 2011’s declines in both gold and silver can be counted as ending five wave impulse downtrends into the late 2015 lows. If so, it will be impossible for them to break to new record highs during the latter stages of the decennial ‘inflation-pop’ cycle. So everything rests upon whether those 2011-2015 declines are impulsive or corrective.

    If gold miners are set for record highs, shouldn’t bullion follow? That seems logical and remains as our preferential bullish counts to this day. But that doesn’t mean we’re complacent either – we’re continuing to track gold’s three price-swing advance from 2015’s low whilst comparting this to silver’s relative underperformance. So far, the pendulum between medium-term bullish versus bearish forecasts has swung a little more to the bearish side basis recent developments. Gold reacted from just below zig zag measurements of 2015’s advance at last week’s high of 1611.37 – meanwhile, silver was still trading far below 2016’s initial high of 21.14 and more importantly, remaining below last September’s high of 19.666.

    Together, these aspects suggest significant downside risk over the coming months. Declines may not yet reveal the true path over the medium-term, but they will clarify its intention should prices decline as deep as we expect them to – the secret is to remain open to these varying possibilities – both bullish and bearish Elliott Wave patterns are shown/discussed in this PART II series report/video.

    New Commodities 2020 Video – PART II/III

    We’ve amassed over 90 commodity charts from our EW-Forecast database in this year’s Commodities 2020 video – A NEW RECORD! Each one provides a telling story into the way Elliott Wave price trends are developing in this next ‘INFLATION-POP’ phase of cycle development. We’re taking a look at some very specific patterns that span the entire SUPER-CYCLE, explaining why the super-cycle began from the GREAT DEPRESSION lows of 1932 and not from the lows of 1999 and how this ended in 2006-2008 and why the multi-decennial corrective downswing that began soon afterwards is taking the form of a very specific, but identifiable Elliott Wave pattern.

    We invite you to take this next step in our financial journey with us – video subscription details are below – just follow the links and we’ll see you soon!

    Most sincerely,

    Peter Goodburn
    Founder and Chief Elliott Wave Analyst
    WaveTrack International

    Commodities Video Part II Contents: 92 charts

    • CRB-Cash index + Cycles
    • Copper + Cycles
    • Aluminium
    • Lead + Cycles
    • Zinc + Cycles
    • Nickel
    • Tin
    • XME Metals & Mining Index
    • BHP-Billiton
    • Freeport McMoran
    • Antofagasta
    • Anglo American
    • Kazakhmys Copper
    • Glencore
    • Rio Tinto
    • Teck Resources
    • Gold + Cycles
    • GDX Gold Miners Index
    • Newmont Mining
    • Barrick Gold
    • Agnico Eagle Mines
    • AngloGold Ashanti
    • Silver + Cycles
    • XAU Gold/Silver Index
    • Platinum
    • Palladium
    • Crude Oil + Cycles
    • Brent Oil
    • XLE Energy SPDR Index

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  • Each video runs for at least 1 hour 20 minutes and it’s packed with SPECIFIC Elliott Wave price-forecasts. The Stock Index Video is already nearly 2 hours long!.

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  • BONUS! The Commodities Video Outlook 2020 contains 92 charts already. illustrated in the VIDEOS will be created into a .pdf document/report and sent to you so that you can always keep these to refer to!

    • PART III will be available in a few weeks’ time – we’re working on it!

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    Category: AngloGold Ashanti, Baltic Dry Index, Base Metals, Commodities, Commodities Video Outlook 2020, Copper, CRB, Crude oil, crude oil price chart, Cycles, Elliott Wave, Fibonacci-Price-Ratio, GDX, Gold, Gold Mining, Mines, Mining, Palladium, Platinum, Precious Metals, Silver, VIDEO OUTLOOK 2020, XAU Gold/Silver Index, Zinc

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