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Commodities: 20-Year Bear Market In Play?

ByChris Kimble
Published 08/02/2015, 12:24 AM
Updated 07/09/2023, 06:31 AM

CRB Index 1961-2015

This chart looks at the Reuters/Jefferies Commodity Index (CRB) on a monthly basis for the past 50 years

The index took off in the early 1970s and rallied over 200% in a little over a decade at (1). Then it created a potential double top.

So what followed at (2)? An unwinding of the rally that lasted nearly 20 years, taking it to the bottom of its rising channel.

In the early 2000s, the index took off again, gaining over 250% in a decade's time at (3). That rally looks to have ended in 2011, as it was hitting the top of this long-term rising channel.

Since hitting the top of the channel the index has been pretty soft, losing nearly 40% of its value in the past few years.

Could commodities be pulling a repeating pattern again and remain soft for a long period of time?

If you are like me, it's hard to believe that commodities could be in a 20-year bear market again. What is happening to the index at this time looks like the trend will continue, as the index could be breaking triple support at (4) right now. If it does break down through triple support, it would suggest the down trend in this space continues.

Latest comments

simplistic comment mark - we are not only experiencing supply and demand re-balancing issues - technology makes it easy for too many suppliers to borrow to make too much / mine too much / pump too much at a time when tech has also automated large demographics out of a job - and that is globally - so deflation comes on heavier this time around - global slowdowns due to a confluence of many factors. this will be much more difficult to grow our asses back, and the entire world is synchronized on everything.
However, China could prove troublesome, along with the Greek saga. We could be looking at a 5 year period where stocks will struggle to break any recent major resistance levels, causing a wide consolidation channel with profit taking
China has been showing some signs of recovery though I can't say the same for the Greek saga. The current Greek deals does nothing to improve their economic outlook and there is little to no effort done to rectify this. The Greek mess will likely continue on for quite some time.
Mark. Agree. We are living in very different times
20 year. You must be kidding. This are not 80's. World is global. with low prices, supply will vanish and then price will go up.. Like somebody said, cure for high supply is low price and cure for high demand is high price. . Currently demand is high, because financing is free and there is a lot of player in industry that are far over any normal level of debt. When they will hut bankruptcy, supply will go down.
I agree with the theory but this scenario has a sophisticated BB, the Fed. They are ******the comms markets single handidly, when the US goes bust and it will, then the prices will sky rocket like never before, until then a few more lows are imminent
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