THE CAPITAL OBSERVER

Commodity Related Articles 2017 

January 2017 (published on the 17th January)

As Equities top and Oil fades, Gold may shine again (p12-14)

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The article correctly identifies the bottoming process of Gold and Goldmines vs the S&P500 (an intermediate bottom) and their possible bounce towards mid year at least (was rather a flattish consolidation to the upside on Goldmines). On the sector rotation front, it clearly states that Energy should reverse down vs Goldmines, probably towards mid year, with significant downside potential (which turned out to be very correct).

February 2017 (published on the 21th February)

Oil could correct down into Q2 2017 (p20-22)

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A strong warning of the important intermediate top coming up on Oil, possibly from late February / early March, and the following correction down, which could last until mid Q2 2017, possibly mid year, and trigger a potential USD 8 to 13 USD/barrel correction on Brent.

It also clearly states that Energy could be one of the weakest sectors over the following 3 months and that the Alternative Energy segment should outperform the rest of the Energy space.

February 2017 (published on the 21th February)

Country pair trades related to Oil and the Energy sectors (p28-29)

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Building on the correction we expected on Oil, we recommended to switch out from Energy related geographical regions towards similar, yet less energy sensitive countries. Switch out of Brazil into Mexico, out of Russia into Poland, out of Norway into Denmark, out of China into India.

April 2017 (published on the 26th April)

Gold, a reflationary asset with a defensive bias (p30-36)

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Following a slight retracement down we expected early May (which did materialise), we projected Gold to remain strong towards mid year, possibly retesting the 2016 highs towards 1’370 USD/oz. The general idea was correct, but the re-acceleration really materialised from mid year to September (timing was off).

May 2017 (published on the 26th May)

Oil’s volatile Correction continues to mid year (p23-26)

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We believed that two additional downside retests could be identified over the following few months on Oil, Energy and related currencies and countries, one towards the end of June (the actual turning point for Oil and most related assets), the other towards end July / early August (rather late August: most Energy related assets did see some retracement, and for some new lows, during the August risk-off phase and then reaccelerated). We believed this scenario could work quite well as a build-up phase for the acceleration to the upside of the oil nexus we were expecting later in H2 2017.

June 2017 (published on the 28th June)

Silver and the Silver to Gold ratio (p31-34)

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We has expected the Silver to Gold ratio to turn up from late July / August (following a last sell-off), for a strong move along with other reflation trades into year-end. The last sell-off did materialise as planned, yet the ratio started to stabilize earlier than we thought, from early July. Longer term, the rebound into Q4 2017 did materialise, yet it was quite weak and ended prematurely in November.

 

July 2017 (published on the 28th July)

Oil is building a base, late Summer could see it rise again (p27-35)

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Although we did see some risk remaining into August (which to a certain extent did materialise on most Energy related assets, it was rather a retracement that a strong sell-off though), we were pitching that any retracement/sell-off/ re-test into August would provide great entry points to the strong uptrend we expected globally on Energy towards year-end. We confirmed this great medium term Buy the Dips call on all Energy related assets (Oil, Sectors, Geographies, related Currencies) and even projected that Brent would reach the high 60s USD/barrel late 2017 / early 2018. In general, during H2 2017, these trades were strong outperformers.

July 2017 (published on the 28th July)

There will be multiple opportunities in H2 2017 for Commodities (p38-43)

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We believed that Commodities and related assets (Industrial metals, Steel, Coal, related sectors) was finishing off the retracement started in the Spring. We did expect some retracement into August (which eventually happened in September). More generally, most commodity play were expected to resume their uptrend from mid Summer 2017 to Spring 2018. The outperformance potential for both commodities and their related equity sectors was seen as substantial.

August 2017 (published on the 30th August)

China and base metals are re-accelerating, this trends should continue into H1 2018 (p26-31)

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China and Industrials Metals did lead the reflation trades back up into H1 2018. For Industrial Metals especially, the acceleration has been impressive and did continue until year-end as planned On these, some retracement into late September/ (early) October even provided the good “Buy the Dips” opportunities we has expected.

August 2017 (published on the 30th August)

Gold, the canary in the Goldmine for reflation trades (p41-42)

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Gold had been quite strong throughout July and August. This strength was telling us that reflation trades may see further re-tests to the downside before they accelerated up again, sometime from late October / early November towards year-end (that further dip actually materialised in November and reflation trades really accelerated up again in December). In the meantime, we expected that early September could see some retracement in Gold and a bounce in reflation assets (which was extremely correct).

September 2017 (published on the 29th September)

One last push for Gold and Defensive assets could provide an ultimate exist opportunity (p28-34)

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We then believed that Gold could could initiate a last to rally, probably into the high 1’300s, before it started to consolidate down into next year. A sideways move up up did materialise during early October and November, before a sell-off towards late November / early December, yet the move was much weaker than we had expected (up to slightly above 1’300 USD/oz). We were also too aggressive on Goldmines, which basically held ground until late November, instead of moving up.

September 2017 (published on the 29th September)

Oil should retrace during October before it resumes its uptrend towards year-end (p38-44)

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Picking intermediate tops is always tricky. The correction we expected materialized, yet was shallower and shorter than we had expected. The article however reaffirm our strong bullish bias on Oil and related trades towards year-end and on average sets forward some very interesting segment plays (e.g. E&P vs Integrated and Oil services vs the wider Energy sector, from the end of the retracement towards year end).

November 2017 (published on the 1st November)

Short term Oil may Stop and Go, yet is still very positive until late December / January (p 41-45)

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We were expecting a slight pull-back over the next couple of weeks, then Oil and Oil related trades should continue to accelerate towards year-end (which was correct as Oil was pretty much flat during November and most Energy sectors underperformed into mid November). Following that, the US Energy sector should finally gather some momentum, that could outperform towards year-end and early 2018 (it finally did between late November and January).

January 2018 (published on the 10th January)

Commodities have re-synched in December, yet should diverge again in Q1

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As of early January, we expected Oil to continue to perform, Copper to consolidate at high levels and Gold to sell off. These projections have proven correct on Copper, yet incorrect on Oil which suffered from the risk asset crash in late January / early February, and too conservative of Gold, which is holding up for now. We now expect (as of late February) that all 3 could consolidate once more into late Q1. From Q2, Copper should take the lead while Oil continues to perform and Gold stabilizes. Finally, from mid year, we would be buyers of Gold, while selling Oil and Copper [these Q2 and H2 outcomes could still materialise].

[Article not yet in free access on the website, yet available upon request]

February 2018 (published on the 8th February)

Commodities may consolidate towards late Q1, they should then re-acclerate up again towards late Q2 / mid year (p18-23)

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Since early 2016, Industrial Commodities (e.g. Copper and Oil) have fulfilled our targets, both in terms of price projections and timing, and Q1 may now see them retrace some of their recent gains. We also expected Gold to retrace towards end Q1 and Agricultural Commodities to outperform until then. It is currently too early to tell, if these projections will prove to be correct. Following that, we still expect Industrial Commodities to resume up one last time from late Q1 to late Q2 (also too early to judge yet).

[Article not yet in free access on the website, yet available upon request]