Green shoots... of inflation

[bart]

The chart says it all - the CRB Commodity Index correlates with and leads the CPI, especially during hard asset cycles.



http://www.nowandfutures.com/images/crb_vs_cpi_short.png



The long term picture:

http://www.nowandfutures.com/images/crb_vs_cpi.png

[Lukester]

Spell it out for us Bart. In plain black and white, what you see for the next two years if this reversal describes a sustained trend.

[Jay]

Spell it out for us Bart. In plain black and white, what you see for the next two years if this reversal describes a sustained trend.
The title spells it out Luke. Bart's made no long term predictions in this thread, except to show a solid approximation what has happened just recently. I think if you have followed his other posts over the years, which I am sure you have, it is clear where he falls in the overall debate.

[metalman]

The title spells it out Luke. Bart's made no long term predictions in this thread, except to show a solid approximation what has happened just recently. I think if you have followed his other posts over the years, which I am sure you have, it is clear where he falls in the overall debate.

bart's charts confirm... Deflation fare thee well, we hardly knew ye (http://www.itulip.com/forums/showthread.php?p=97954#post97954)

[dummass]

Yes, we finally have our answer. But it seems so obvious now that it has been spelled out. ;)

For once, I agree with Luke: Bart lives in the future; he should be able to give us some more insight. :D

[bart]

Yes, we finally have our answer. But it seems so obvious now that it has been spelled out. ;)

For once, I agree with Luke: Bart lives in the future; he should be able to give us some more insight. :D

:D

"It's tough to make predictions, especially about the future."
-- Yogi Berra
:p



The bottom line and my best guesses align pretty well with KaPoom, with the possible addendum or addition of a higher volatility component during the transition from Ka back to the full tilt inflationary Poom - caused by a much higher set of political factors than what we had in the '70s in the last "hard asset" cycle.
I'm very much on board with the "currency event" iTulip view, although again with the possible addendum or addition of multiple currency events in our future.


I haven't posted this for a while, and it's in the top three charts I use to help divine what's ahead on the long term.

http://www.nowandfutures.com/images/dow_gold_oil_crb1966-current.png



... and in an effort to show where we are in the current cycle, here's a static version of the same chart but with a general trend line drawn in on the Dow/gold portion of the cycle.

http://www.nowandfutures.com/d2/t_dow_gold_oil_crb1966-current.gif


My take-away - this time around the cycle is being managed to a significantly higher degree, but the eventual outcome is in little question for me.

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
-- Charles Mackay, 1841, "Memoirs of Extraordinary Popular Delusions and the Madness of Crowds"

[dummass]

If I were to fold your chart at around 1999-2002, we would have a "V" shaped retracement to 1981-1983 levels. Am I reading this correctly?

[bart]

If I were to fold your chart at around 1999-2002, we would have a "V" shaped retracement to 1981-1983 levels. Am I reading this correctly?

Yes, I think so although I'd be more comfortable with the retracement being to 1986-1989 levels.

[dummass]

Yes, currently, we have retraced to 1986-1989 levels. The trend would take us to 1981-1983 levels. Unless... Are you predicting the end of the trend?

DOW/GOLD 7:1 March 2009. Was that it?...the bottom is in?

What about Poom? I'm confused. I thought inflation would take DOW/GOLD to 2:1

[bart]

Yes, currently, we have retraced to 1986-1989 levels. The trend would take us to 1981-1983 levels. Unless... Are you predicting the end of the trend?

DOW/GOLD 7:1 March 2009. Was that it?...the bottom is in?

What about Poom? I'm confused. I thought inflation would take DOW/GOLD to 2:1

oops, misunderstood your question.

I think we'll easily exceed the 1981-83 levels and am also not at all predicting the end of the trend.

I don't see any chance of a final peak before 2011 (under what appear to be quite unlikely scenarios) and think it much more likely to be at least 2013 and beyond... and with a Dow/gold ratio below 1:1, although the gold price at the peak may be either controlled or based on black market prices.
The trend line I drew was only for illustration of the current picture, and I believe it will get much steeper in the future.

[dummass]

DOW/OIL seems to be tracking DOW/GOLD. What are your thoughts on this trend, in the context of peak oil?

[bart]

DOW/OIL seems to be tracking DOW/GOLD. What are your thoughts on this trend, in the context of peak oil?


Yes, Dow/oil has been tracking Dow/gold pretty well since roughly the 1920s. Oil is at least as good a hard asset as gold or silver, and more important for broad survival too - barring a major breakthrough via something like cold fusion, which I think my daughter will see in her lifetime.


http://www.nowandfutures.com/images/dow_gold_oil_crb1900-current.png



For whatever reason(s), I'm a lousy oil trader & investor - the markets do things that surprise me too many times. But that said, my absolute minimum long term oil target for this cycle is $350... and $600 is far from impossible - sad to say.

[dummass]

That certainly puts things in perspective. I guess I'm still on the steep end of the learning curve. Thanks for taking your time to explain what must be obvious to many on this site already. You don't get this prediction from anybody on Bloomberg!

http://dilbert.com/dyn/str_strip/000000000/00000000/0000000/000000/50000/4000/500/54569/54569.strip.gif?ref=patrick.net

[WildspitzE]

:D

"It's tough to make predictions, especially about the future."
-- Yogi Berra
:p



Hey bart, thanks for the chart in this post. It certainly summarizes a lot of the things (and then some) that I keep track of. This chart sure as hell makes it easier on me.

Do you keep this one updated on your website?

If so, I'll have to dig it up and put it on my to be monitored list.

Thanks again man.

[bart]

That certainly puts things in perspective. I guess I'm still on the steep end of the learning curve. Thanks for taking your time to explain what must be obvious to many on this site already. You don't get this prediction from anybody on Bloomberg!

http://dilbert.com/dyn/str_strip/000000000/00000000/0000000/000000/50000/4000/500/54569/54569.strip.gif?ref=itulip.com

My pleasure, and extra points to you for both asking and having your eyes open for new viewpoints... and who knows if I'm correct too. My viewpoints and predictions are just semi-educated guesses much like the other denizens here.

Great Dilbert - I hadn't seen it before. :D

And amen(!) on Bloomberg and so many other sites versus iTulip and both its tolerance and its fact based approach.

[bart]

Hey bart, thanks for the chart in this post. It certainly summarizes a lot of the things (and then some) that I keep track of. This chart sure as hell makes it easier on me.

Do you keep this one updated on your website?

If so, I'll have to dig it up and put it on my to be monitored list.

Thanks again man.

Yes, the series is all on my site, but I've just started a new thread here that has all four charts in it - Paper vs. hard or tangible asset cycle (http://www.itulip.com/forums/showthread.php?t=10160) so you can monitor it from there.

[kartius919]

What a great quote by Mackay.