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Let’s start with Gold:
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That is the short-term picture. Does the easing Gold price means that investors are now less risk averse and are prepared to sell Gold and buy shares? Maybe in the short term. We will look at other time frames in a ‘Special’ on Gold in the coming weeks.
Crude Oil shows a very different picture:
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A limited upside in the coming months. But on the bigger picture:
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Crude Oil is still well off its highs for four years ago and is drifting sideways.
Copper shows little life in the near-term:
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And little life in the medium-term:
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And little life in the far-term:
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So it could be years before we see life come back to Copper. The principle reasons appear to be supply and demand driven with new Copper projects coming on to the market at a time when demand is already being met.
Nickel:
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Nickel is used in higher grade steel and indicates the demand for steel in emerging markets. It is also particularly indicative of improving standards of living in these countries.
Further out, Nickel is shows signs of easing:
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Zinc:
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Some upside in the near-term but really going nowhere:
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Half of the world’s Zinc goes into galvanizing building products like roofing iron for cheap housing in emerging markets. So this is going nowhere.
Summary:
The outlook for resources reflects what we are seeing globally except for the USA where equity indices are getting ahead of themselves.
Europe, the second largest global consumption bloc, is still in recession so there is very little demand from there.
Asia is weakening and I cannot see any real spark here.
All in all, the economic super-cycle is far from resuming. We are unlikely to return to the heady days of 2003-7 for years. But there will still be short-term opportunities to make money – epically if you buy during the dips and pullbacks.
Enjoy the ride
Tom Scollon |