A very interesting stance on the commodity market with US Elections around the corner ⬇️
c/o Robert Minter, CFA, CMT, CAIA (abrdn)
https://lnkd.in/e4ehJSUG
Some key takeaways:
→ 𝗖𝗼𝗺𝗺𝗼𝗱𝗶𝘁𝘆 𝗠𝗮𝗿𝗸𝗲𝘁 𝗗𝘆𝗻𝗮𝗺𝗶𝗰𝘀:
Commodities are not widely understood compared to stocks and bonds.
Many equity managers lack in-depth knowledge of individual commodities, and challenges like mine development delays (averaging 20+ years) affect supply dynamics, making commodities appealing due to their uncorrelated nature with other markets.
→ 𝗢𝗶𝗹 𝗮𝗻𝗱 𝗚𝗼𝗹𝗱 𝗦𝗲𝗻𝘁𝗶𝗺𝗲𝗻𝘁 𝗜𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿𝘀:
Investor sentiment is low on oil, indicated by the lowest long contract positions since 2011, which historically signals a potential price rebound.
Similarly, central bank gold purchases are supporting the price despite ETF investor sell-offs, with anticipated rate cuts potentially sparking a new gold bull market.
→ 𝗘𝗹𝗲𝗰𝘁𝗿𝗶𝗰 𝗩𝗲𝗵𝗶𝗰𝗹𝗲 𝗧𝗿𝗮𝗻𝘀𝗶𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗣𝗿𝗲𝗰𝗶𝗼𝘂𝘀 𝗠𝗲𝘁𝗮𝗹𝘀:
Demand for platinum and palladium, essential for pollution control, remains strong due to the slow adoption of EVs in the U.S.
Despite negative sentiment and declining prices, hybrid and fossil-fuel vehicles still dominate, presenting a potential upside for these metals amidst market undervaluation.