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Is the worst finally over for commodities?

by , 01 May 2015

After seven rocky years, there are signs that things are turning around for commodities.

Since 2008, prices of commodities are down around 60%. Over the past year, they're down about 25%.

But change could be on the cards for commodities.

Read on to find out more and if you should start thinking about getting back in…


There is a hint of a recovery in commodities


Have a look at the chart below of the Bloomberg Commodity Index…


Chart of Bloomberg Commodity Index


The index weights are as follows: Energy 33.2%; agriculture 28.7%, industrial metals 16.7%, precious metals 16.5% and livestock 5.1%.

The index bottomed in March and has been slowly inching higher since. So have commodities reached a turning point?

Last month saw investor sentiment toward commodities reach an extreme low.

Sentiment hasn’t been at levels this low since 2001 and late 2008. And buying at those point would have been good times, Dr Steve Sjuggerud in Daily Wealth explains.


Time to buy commodities?


Historically, assets don’t reach a bottom until sentiment towards them is awful. With a hint of an uptrend that’s continued for over a month, the situation for commodities could be looking up.

Other assets, like shares and property, have done really well over the past few years yet commodities have languished.

It might be a bit early to enter into a long commodities trade. To be sure, wait to see if the rise continues. But the time could be nearing for the commodities bull to return.

So there you have it. Why the worst may finally be over for commodities.

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Is the worst finally over for commodities?
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