Samuel Pelaez: Commodities Are The Cheapest they have Ever Been Compared to the S&P
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Samuel discusses a chart that compares the S&P 500 with the commodity market. It suggests that commodities are as cheap as they have ever been in history. If you sold one unit of your market exposure today, you could buy the largest amount of commodities ever.
The chart goes back sixty years, and shows that there have only been two other opportunities (1970 & 2000) where things have been nearly as extreme as today. The chart suggests that we are on the verge of another bull market that could run for as long as a decade. Investors should be gradually rotating their gains into the commodity sector.
This year has been a challenging year for resources; recent trade wars and tariffs are likely all part of a negotiation tactic that will be short lived.
China is working on a significant infrastructure project called the One Belt One Road where they are industrializing two dozen countries into a modern Silk Road. Much of the world is developing, and the demand for commodities remains strong. He feels that right now is a good time for all commodities and energy.
This year has been disappointing for gold, and the biggest reason has been the strong dollar. However, inflation is creeping in and showing up in energy and fuel prices. He feels that this will stall the dollar and gold will pick up.
Samuel describes Galileo Global Equity Funds and how they manage them to avoid risk while still looking for outsized opportunities in the commodity sector.