After suffering a multi-year bear market, commodities are starting to perk up, possibly reacting to an intermediate-term top in the US Dollar. Commodities can run aggressively higher and if we start to see more signs of inflation in the US as a result of tight labour markets and loose monetary and fiscal policy, I think this sector could get up a head of steam quite quickly. Commodities have a strong inverse correlation with the USD and have been in quite a slump for the last 6 years. They are unloved, undervalued and under-owned as an asset class and trading at multi-decade lows. Agricultural commodities (DBA) and industrial/base metals (DBB) are amongst the commodity ETF’s that would capture a run higher should it get going.
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