We recently published a chart for natural gas saying that at some point, maybe soon, we will buy it we think that time has come, at least as far as the chart is concerned. Commodities, like currencies, are traded technically as well as fundamentally.
From the monthly chart below you will see that the price has reached a seven and a half year low and is at a support level that has held since 1994.
As can be seen from the daily chart (below), this allows us to enter the market with a close stop loss and be reasonably confident of a significant short-term, if not long-term, gain.
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The crude oil price, to which natural gas has lost all semblance of correlation, continues to consolidate; recently it rallied to near the high of the range through which a buy opportunity might also arise.
Metals have performed well although, the Industrial Metals ETF, as you can see from the chart below, has no more than consolidated. However, such a period of consolidation will lead either to a breakdown or a surge higher. We may well again invest in this, if the opportunity occurs.
Whatever happens going forward, whether we are right about the UK stock market or not, one thing we are comfortable with is that emerging markets and commodities represent the best investment opportunities for the future.
The world is embroiled in a great power shift, from the West to the East, from America to China. Already emerging markets provide more than 50% of global GDP and their economies have colossal potential for further growth. China and India will become economic behemoths. They will demand a better quality of life which will ensure a rapidly escalating demand for natural resources and a corresponding increase in their prices.
Sinisterly, the Chinese saying "May you live in interesting times" - and we are - is a curse.
This article was written by Full Circle Asset Management, as published in the threesixty Newsletter on 11 September 2009
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