This Commodity Chart Shows Where Things Are Headed

Editor’s Note: This is an excerpt from the October premium issue of Foundational Profits. It offers a commodity update centering around a chart that reveals where we are in the cycle, and two ways to play it.


This Commodity Chart Shows Where Things Are Headed

During our first ever Quarterly Call-In last month — thanks to those of you who attended — I received many questions about individual commodities like oil, natural gas, uranium, rare earths, and silver. 

You can get access to the replay of that Call-In for premium members here. 

I promised one reader I would include a long-term commodities chart I had made in the upcoming issue. Here it is: 

CRB Commodities Index - long-term commodities chart I had made in the upcoming issue.

It shows a commodity cycle that took 14 years to peak from 1994 to 2008 and twelve years to trough from 2008 to 2020 — with several shorter-term countertrend moves on the way up and down. 

To me, it also shows another long-term upcycle began in 2020 and that we’re in the midst of one of those countertrend moves.

Important to note is that this index doesn’t only include metals. It includes 19 commodities across four groups:

  • Agriculture: Cocoa, Coffee, Corn, Cotton, Lean Hogs, Live Cattle, Orange Juice, Soybeans, Sugar, Wheat
  • Energy: Crude Oil, Heating Oil, Natural Gas, RBOB Gasoline
  • Base Metals: Aluminum, Copper, Nickel, 
  • Precious Metals: Gold, Silver

You’ll note it’s more heavily-weighted to agriculture and energy, which have seen better price performance this year than the metals. 

You’ll also note that from 1997 through 1999 the index sold all the way off to its original baseline. 

It’s my contention that we’re at the beginning of another decade-plus bull market in commodities, but that given the current economic contraction we could see a retracing of recent gains that takes up to two years to play out. 

My caution in this regard is evidenced by our recent selling of copper-related stocks like Rio and Ivanhoe. 

But with 19 commodities in the index — and many more outside of it — we’re sure to find some gains along the way if that does end up being the case. 

Lithium carbonate, for example, remains near all-time highs near $70,000 per tonne. 

And uranium remains positive for the year just north of $48 per pound. 

You can get my top recommendations in the lithium and uranium sectors here.

Nick Hodge

Nick Hodge
Publisher, Daily Profit Cycle