Commodity supercycle just getting started, could last another 8-15 years - Bull and Bust Report's DeHaemer
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(Kitco News) - Gold, uranium, oil, and other commodities are dramatically increasing in value even as the U.S. dollar strengthens, signifying the potential start of a new commodities supercycle, according to Christian DeHaemer, founder of the Bull and Bust Report and editor at Energy and Capital.
DeHaemer observes that uranium miners’ stocks are increasing in price, such as Cameco, which is up over 750% from its 2020 lows, and the same is true for many coal producers. “Oil prices are also up, with WTI above $90 and heading to $100,” he said, noting that JPMorgan sees Brent crude rising to $150 per barrel by 2026.
“It should be noted that all of these energy sources are becoming more expensive even though the U.S. dollar has been gaining in strength over the past few years and also despite the fact that wind and solar have been heavily subsidized,” he says.
“This raises the question if we are in or about to enter a new commodity supercycle.”
DeHaemer writes that a global commodities supercycle can be defined as “a sustained increase in the price of commodities that lasts more than five years” and points to the example of the recent supercycle which began in 1999 and ended with the financial crisis of 2008.
“During that time, oil climbed from $10 to $150 a barrel, copper jumped $0.60 to $4.60 a pound, and gold went from $250 to $1,921 an ounce,” he said. “In the mid-2000s, China was buying up all the world's commodities as it went on a debt-laden urbanization spree.”
DeHaemer writes that the four commodity supercycles that occurred over the past 100 years were each caused by a unique combination of factors. “However, they each had a common driver, which was the interaction of large, unexpected demand shocks and slow-moving supply responses,” he says.
He also notes that each supercycle was separated by 15 to 20 years. “We are now 15 years past the last one and in the last quarter of 2023,” he writes. “It is the third consecutive year that has seen a total of 27 commodities — ranging from metals to energy to agriculture — racking up huge gains and outperforming every other asset class.”
“If the past is prologue, the supercycle is just getting started,” DeHaemer concludes. “If you take the start of the trend from the bottom point in 2020 when oil prices briefly went negative, we can assume we have another eight to 15 years left of the commodity bull market.”