The inflationary heat has faded slightly, as some commodities have moved away for the tops. Will it last? Forecasting the future is always a challenging art. Nonetheless, 50 years of inflation’s history show some repetitive behaviour that could help better understand the actual situation. Let us see how.
Since 1950, the CRB commodity index (it averages a basket of 19 commodities) had two inflationary cycles. One has topped in 1951, while the other finished in 1980 (29 years time span). From bottom to top, the uptrend of the last inflationary period has continued for about 12 years (1968-1980) and the steam has run for 65% (top/bottom). The periods of consolidation (1951-1968, 1980-2002) have continued for about 20 years. During these phases, the index topped and bottomed roughly every 4/5 years.
How this could be applied to today markets? The last uptrend in commodities started in 2002 and topped for the first time in 2008 (50%). A new move initiated in 2008 and is still on (44% top to bottom). As a result, a pick might be closer, if 4/5 years top to top distance is taken into consideration.
Written by www.ProfitsOn.com
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed, neither the information presented nor any opinion expressed constitute a solicitation of the purchase or sale of any forex, futures or commodity product. Those individuals acting on this information are responsible for their own actions. Forex, futures and commodity trading may not be suitable for all recipients of this report. The risk of loss in trading forex, futures and options can be substantial. Each investor must consider whether this is a suitable investment. All recommendations are subject to change at any time. Past performance is not a guarantee of future results. Please Note: All performance figures and illustrations were obtained using historical back testing on a computer and are not the results of an actual account. No guarantee is inferred that future performance will be like the results shown. Futures, forex and options trading involve risk. There is a risk of loss in futures, forex and options trading.