If you’re looking for re-inflation, look no further than gold

Not only has gold moved into positive year-over-year territory, but TD Securities analyst Chris Dutton thinks it may be leading the way for other commodities.

This is not the first time gold has been the leader amid a seasonal and technical rally in the commodity space.

Ecuador turning a large part as Lundin plots big gold mine

Mining entrepreneur Lukas Lundin has a well-earned reputation for succeeding in places where others refuse to tread. Even, it seems, Ecuador.

Read more

For yesteryear five years, it has usually occurred around this time – the very first quarter – but has often been consult quick reversal in Q2.

However, when the long-term record is an accurate guide, the current gold price recovery could prove to become more of a cyclical – and for that reason sustainable move – as opposed to what is happening in the recent past.

“From a macro/technical perspective, we feel that the recent recovery in gold might be signalling an inflection point and also the potential beginning of a late cycle re-inflation phase,” TD Securities analyst Chris Dutton told clients.

He noted that a key precondition for starting off re-inflation cycles of history, plus a shift in investor sentiment from disinflation toward rising inflation expectations, has been a collapse and bottoming in oil prices.

Dutton noticed that oil’s dramatic declines in 1981, 1992-1993, 1997-1998, 2002, 2006, 2008, and 2014-2015 were all disinflationary at first. However, when the year-over-year alternation in oil prices starts to rise (from the decline of fifty per cent more often than not), the analyst believes a disinflation low is made.

“Gold prices almost always move higher awaiting this quite simple re-inflationary math,” he said, adding that in periods of re-inflation, gold stocks usually outperform the valuable metal itself.


About admin


Check Also


Twitter Inc’s user growth stalls as sales forecast falls short of estimates

Twitter Inc. said it didn’t add new users in the fourth quarter and forecast first-quarter ...


Manulife Financial Corp profit slides 62% as energy investments take a hit: ‘A disappointing year’

TORONTO – Energy exposure hit the conclusion of Manulife Financial Corp. in the fourth quarter, ...


Pension funds hope for better deal in de-risking marketplace

A pension risk exchange – an online marketplace that aims to create those defined benefit ...