The Asian Rebound
Trade in Soda;
The weekend saw military action in the Middle East on a grand scale, and by Monday financial markets had shrugged it off. The targets were nuclear facilities and not oil, and the Straits of Hormuz would remain open. Gold eased back, the US dollar rally fizzled out, and as we are becoming used to, the bond market barely reacted. The oil price quickly retreated from $80 back to $69, which is the level seen two weeks ago.
Brent Crude Oil Price
Gold’s retreat was not material, but neither was its rise beforehand. Yet bitcoin, rallied as gold fell. It is notable how gold firmed on the sound of war, while bitcoin recovered on the sound of trumpets. Gold likes war, while bitcoin prefers peace.
Bitcoin, Gold, BOLD past 30 days
Yet there is no peace as the war keep going and as President Trump eloquently put it, “we have two countries that have been fighting so long, and so hard, that they don’t know what the f**k they’re doing.”
Some commodity stocks, mainly oil, have eased back since yesterday’s pause, and travel stocks have rebounded. Yet the commodity picture remains mixed. I keep a close eye on the copper price which looks interesting.
London Metals Exchange Copper Spot – 10 years
Glencore is a diversified miner, and it should be a value copper play, and so there’s hope. But it’s curious that stocks such as Rio Tinto, BHP, and Anglo American are yet to acknowledge the strength in metal prices in general. I feel we bought the right one in May, at a time when it was unusually cheap.
Major Diversified Miners
Silver, platinum, palladium, tin, and aluminium are all trending higher, and so the related companies should rally. Coal and steel remain absentees on the bull list, but prices are historically low. These, along with oil, are the missing pieces from the long-awaited commodity bull market. You’ll recall my favourite commodity index, the CRB Rind, which includes non-speculative commodities such as scrap metal, burlap, hides, cloth, lard, rubber and steers. These are real world items, and the chart suggests that broad commodity prices are attempting to enter an uptrend once again.
CRB RIND Index
Good news came from the Blackrock World Minding Trust held in Soda. Although it holds many of the diversified miners, with Glencore the largest holding, it also holds gold, silver and copper stocks. What’s notable is how this diversified approach has worked quite well, in a volatile market, and the discount (red) has practically closed. This means the trust share price has rallied back towards fair value, implying increased demand for mining stocks. This is a positive development, and a good omen for the sector.
BlackRock World Mining Trust
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