Why Commodities Move in Packs — And What History Says Happens Next

A fundamental question to ask: Why are commodities rising all at once?

It started with gold. Then silver. Then Platinum. Then Copper. Aluminium, Uranium, and Zinc have all followed too.

And now it’s the laggards… Oil, Gas, and Coal.

Is the global economy playing a game of commodity dominoes? Or is something else happening here?

First up, no one seems to tackle this fundamental question, or at least recognise it, and that’s probably because they’re too caught up in the ‘news of the day.’ They’ve lost any long-term lens through which to view the commodity market.

You’ve probably seen it; each price spike, for say copper, can be ‘explained’ by some geopolitical factor or a demand-and-supply factor.

But these headline explanations never get to the heart of WHY virtually ALL commodities have entered a phase of price inflation.

Instead, convenient and ‘rational’ explanations are used to justify price rises.

Let’s take gold… Much of the bullish momentum has been driven by concerns about ‘US Dollar debasement.’

Endless money printing and the dilution of the value of paper cash have been viewed as key catalysts for rising gold prices.

But I don’t buy it.

US Dollar debasement has ALWAYS been a concern for investors.

I recall back in the early 2000s, the commodity boom, gold was surging like it is today. And what was the key explanation for gold’s record surge twenty years ago?

Dollar debasement!

Excessive money creation and high government debt have slowly eroded purchasing power and currency values throughout recent history.

In other words, dollar debasement has been happening alongside surging, falling, and flat gold prices!

So, again, this ‘reason’ doesn’t go to the heart of WHY gold is in a bull market.

It’s just a recycled narrative that gets pushed out every time gold prices rise.

But to get to the core reason, we need to recognise this:

Commodities rise in packs

Commodity bull markets are characterised by broad gains across metals, minerals, energy, and food. A phase that often lasts 7-10 years.

That’s not to say they’re all rising exactly at the same time. This parallel bull market often sees certain commodities spiking at different times.

For example, gold made a major top earlier this year. Coal is making a major top now. And each top is followed by a period of price stability before it makes another move higher.

That is, until the cycle ends.

That’s how you need to look at this market.

But the biggest mystery: why do commodities rise virtually all at once, despite having very different, sometimes OPPOSING demand drivers?

Take gold: it’s traditionally associated with economic uncertainty and a hedge against market risk.

On the other hand, industrial metals like copper, zinc, and aluminium are tied to the complete opposite dynamic: surging growth!

Two opposing demand drivers, yet very similar performance outcomes.

If you think I’m making this up, well, just take a look at the chart below:

Source: Trading View

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Precious and industrial metals are moving in lockstep. But this is not an anomaly; this is how commodity cycles operate.

So, what’s going on? And why isn’t anyone paying attention to this fundamental question?

Well, that’s what I’m going to try and tackle in our next edition.

Stay tuned.