Commodities Trading: Are Preparations Needed for a 30% Crash?
In light of current complex geopolitical and economic situations globally, such as the declining stock markets in China, there is speculation that some factors could exert downward pressure on commodities trading. According to insights from senior Bloomberg expert Mike McGlone, these developments could have implications for the market.
Observations by a Bloomberg Expert
- The S&P 500’s 10% total return supported a nearly 1% gain in the Bloomberg Commodity Spot Index during the first quarter.
- However, challenges in China, including underperforming stocks and plummeting government bond yields, may indicate a risk that could impact the market by 2024.
Market Analysis by McGlone
McGlone highlights that the record highs seen in gold compared to most commodities, along with a return to pre-pandemic ranges, align with his view on potential deflation following peak liquidity and price levels in 2022. This, coupled with a shift towards a significant reset within the market, suggests a potential downturn in commodity prices.
Implications for Oil and Copper
McGlone also points out that West Texas Intermediate (WTI) crude oil and copper may have reached highs for 2024 in the first quarter, indicating a significant risk for the market. Concerns over potential fluctuations in US stocks could lead to a substantial reset and a potential 30% decline in commodity prices.
Previous Insights from McGlone
Last year, McGlone noted the impact of escalating geopolitical tensions and other influential factors on commodities, contributing to the surge in gold prices to an all-time high and a bullish rally in Bitcoin (BTC). His previous warnings about an impending economic reset and deflationary trends have been ongoing, hinting at the possibility of significant market shifts.
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