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Which Way for Commodities?

We believe commodities are in a secular bear market – a longer-term period of flat-to-down prices. The chart (right) indicates what this suggests for commodity prices in the years ahead a broad trading range. The asset class is following the typical script for secular bears and we expect it to remain intact.4.24.15

That being said, within secular bear markets there can be meaningful shorter-term rallies. In fact, rallies of 40 70% can be commonplace within a longer-term bear market, but they tend to be relative short in duration. Commodities appear to be oversold currently, fears of deflation are rampant, oil prices appear to be bottoming, and commodities have been the worst asset class running for 4 consecutive years. In other words, we are overdue for a rally in commodity prices.

Clients should view a potential rally in commodities (which includes oil and gold) within the secular bear context.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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