Commodity outlook: Multi currency declines indicates deflation, Smart money exiting stocks
New York (Aug 7) Tim price, joined Tip Tv to explain the key causes of concerns in the financial markets today, Selling by Private Equity funds, Dip in commodity prices in all currencies, Gold as a must have asset.
Private Equities selling at record pace
Price believes that the S&P 500 might be closer to seeing a top. He continues by noting how the smart money is flowing out of the markets with private equities selling companies at a record pace in the market.
Commodity prices falling in all currencies
Price believes that there is something more meaningful going on in the commodity markets, with the prices for commodities seen falling all currencies and not only in USD terms. Looking at the Bloomberg commodity index, Price explains how the supercycle seen previous has seem to vanished, with commodities having erased all previous gains to dip to 2002 lows.
Price explains how this is not a phenomena for industrial or precious metals only, and how this is seen across the board for commodities.
Deflation a cause for this Commodity slump?
Price takes a look at what happened in the Japanese markets previously. He further says that this commodity slump might not be a demand/supply issue, and the bigger picture would be something else. Gold has seen a massive selloff in the futures markets, while the physical demand has climbed considerably. Price explains how this commodity uncertainty remains a concern and will lead to a slower global growth ahead.
If deflation and commodity theory is true, then Gold remains a must have asset
Price explains how the alternative currency characteristic of Gold is a key reason why they are still holding onto Gold as an asset. He looks at the historic data from 1971-80 and explains how Gold prices saw a 50% retracement lower before building up around 9times to the upside. He further warns that if the commodity selloff is reflecting deflation then the west will see a QE of a size it has never seen before, and if this happens, Gold remains the asset of choice.