Commodity Cycle due to Government Directive

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Commodity Cycle due to Government Directive

Commodities will have support due to government directives that will use more metals, and industrial metals.  Governments are also buying up precious metals by truckload.

The problem with most commodities is that they are quite volatile and cyclical. We either have too much and prices plummet, or we need them badly and prices skyrocket. How can companies manage their budgets with such cycles? Most of them fail miserably leading to multiple layoffs, budget cuts, and some dividend slashing.

Even the oil boom is starting to fade…

After the summer peak of $120 per barrel, we have seen the price per barrel lose more than 1/3 of its value as it is now trading between $75 and $80. We are not too far from 2018 levels of the high $60s. It doesn’t mean it will continue to drop, but to be on the safe side, I would select companies that have proven they can weather any storm.


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