Last year April, I wrote an article “The Great Rotation of Gold“. I am a firm believer that the long term Commodity bull has run its course and money has to flow to other assets. True enough, the Gold price has been falling for the past two years as shown in the chart below.

GLD chart nov 10, 2014

However, that doesn’t mean the Gold price will keep on dropping but I believe it will most likely normalize and trade in a range for a long time.

Having said that, Oil prices have finally joined other falling commodity prices. Below is the crude oil price chart. In my opinion, prices will likely stabilize near today’s levels.

Oil Chart Nov 10, 2014

If so, will it provide an extended bullish backdrop for global growth? Obviously it is not for everyone. At least much of Latin America, the Middle East and Russia will suffer from this.

This reminds me of an article I wrote in 2011, “Oil your culprit? It is Deja Vu again” When newspaper frequently blames high oil price for stock market corrections. I am interested to know what is the next “culprit” should stock markets drop again.

People always have reasons for what has happened, but little insight into the future.

Do you agree?

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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