As many of you know, I was a hardcore deflationist way back when. Hardcore. But after getting slapped upside the head last year I spent a lot of time reassessing my thesis (and part of me died inside when I did, but Nietzsche says that’s good for us and it’s best not to disagree with him, lol). And $GSG is among the things that gave me a clue as to the strange places we may be headed.
First, let me show you the long-term trend line. You’ll notice is agrees nicely with oil’s. Difference is, oil is still trying to nose through, this one already has. Next chart, let’s move in.
Look at that long-term 250-weekly EMA (green). Above that and it means we’re in a super-long-term uptrend. It’s been under that for basically ever. But now it’s over it. Something’s flipped here. A paradigm shift, a new commodity bullish cycle, whatever you want to call it. At the arrow, I once expressed the thought that it could be a bull trap. The potential was there. That was the bears’ chance to turn the tide and let deflation strike. But nope. We’ve captured the EMA, we’re in a super-long-term uptrend. We are not going to have a massive multi-year bear market anytime soon.
Corrections: yes. Big corrections: sure, some. I will try to catch them. But if this pushes up high enough, we could even have a large (primary?) wave 2 and we’d only be backtesting the breakout (orange box). That is super bullish. I see no deflation anytime soon.