Rosenberg Says Buy Gold, Buy Oil, Buy Commodities

Economist David Rosenberg expects the US dollar to fall. His Recommendation is to buy commodities

That image of the dollar index is relative to June 2001. This is the chart I use.

Technically Speaking

Technically speaking there is no support until 80 or so. That appears to be what Rosenberg is talking about.

Fundamentally Speaking

I believe expected rate hikes will not happen. Moreover, the US deficit is out of control and worsening. This is dollar negative.

However, widely expected ECB rate hikes and tapering are also unlikely. This is Euro negative (dollar positive).

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Unlike Rosenberg, I suggest: Forget oil, buy gold.

Why?

Oil is an industrial commodity and the global economy is weakening. We may be in late stage inflation similar to the surge that took oil to $140 in 2008.

Globally, if central banks fail to meet hiking expectations, gold rates to be a beneficiary regardless of what the economy does.

Mike "Mish" Shedlock

Comments (25)
No. 1-25
Bam_Man
Bam_Man

An excellent hypothesis Mish, with logic that identically matches my own. Rosenberg is half right. No need to bother with oil. We are on the verge of a global currency and debt crisis that will unleash a deflationary tsunami. Industrial commodities are the last thing you want to own right now - even if they do enjoy a small "late-cycle" pop higher in the near term - before collapsing.

Kinuachdrach
Kinuachdrach

Could happen ... but timing might be very important.

When the Hunt brothers tried to corner the silver market all those years ago, one of the unanticipated consequences was that the supply of silver to the market exploded as people realized they could now sell their grandmother's silver teapot for a good price.

India (in particular) is full of ladies with their families' net worth tied up in gold bangles on every limb, ready for market. When the price of gold starts to rise, is it possible we might see a repeat of the supply surge that killed the Hunts' silver dreams? Especially if the global economy is stalling and people have to sell assets to survive.

Snow_Dog
Snow_Dog

So then we should forget about Gundlach’s end of cycle commodities rally?
Rosenberg is not known as a bandwagon jumper but things are so odd right now.

Roger_Ramjet
Roger_Ramjet

If there is war, especially in the middle east, I would own oil!

2banana
2banana

Wars in the middle east are the best of times for LOW oil prices. Look at a graph of oil prices vs the Iran-Iraq War or the Gulf War. A short run up and then a decade of low oil prices.