Once a trend is formed, it is difficult to change in a short period of time. The commodities bull market is certainly not over yet.

Since the beginning of this year, resource commodities represented by copper, aluminum, and iron have almost doubled in price. Many people think that the rise has come to an end, but that is a big mistake. The reason for the price increase of these commodities is mainly due to the unlimited printing of money in the United States, and most of them are denominated in US dollars. To put it simply, it is not that the price of goods has increased, but that the money is no longer valuable and there is too much money. Resources are limited, and when money is unlimited, price increases are an inevitable result. The United States continues to issue bonds and print money, with no sign of raising interest rates or reducing the money supply. Many people are rather obscene and believe that the United States will raise interest rates twice in the past two years. The United States uses its hard currency attributes to shear sheep around the world. It is so comfortable to do so, how could it not print money. The United States is so unreasonable, without principles and hegemony. With such a big world helping it share its difficulties, it will definitely continue to be happy. In layman's terms, once you taste the sweetness, you become addicted. Once you become addicted, you will have many withdrawal symptoms if you want to quit. Until the epidemic is resolved and before the economy fully recovers, loose monetary policy will definitely continue. With unlimited money as the backing, a sharp decline in commodities, or even a sustained decline, is an illusion. Print money to buy these resources. Of course, these resources are not that stupid, and they will also offset the impact of currency depreciation through price increases.

Recently, the price increase of bulk commodities has affected consumption and production, thus triggering economic stagnation. In order to slow down the excessive price rise, the state has adopted price limits, increased supply, increased waste utilization of products, and cracked down on the behavior of hoarding goods in anticipation of price increases, which has eased the rise in commodity prices. In particular, the national reserves of these commodities have recently been used to put a large number of reserve products on the market at significantly lower prices. With the increase in supply, the prices of bulk commodities have been further stabilized. But these only work in the short term. Reserves and policies are limited and cannot change the future upward momentum.

Until there are actual changes in the monetary easing policy and the economy is not completely on the right track, resource commodities will continue to rise in price. To quote a saying that was popular in the early years to represent wealthy people, "Those who have a mine at home"!

1. The recent adjustment of commodities has indeed been a bit fierce. As for whether this round of bullishness has peaked, we need to analyze why the price has fallen sharply recently.

2. The first reason is that China has put reserves into the commodity markets such as copper and aluminum that have surged the most in the early stage. This operation is just like the sharp rise in pork prices in the previous stage when the Central Reserve released frozen pork, and the earlier international grain prices rose too fast and the Central Reserve released grain reserves to the market. The purpose is to hope that domestic commodity prices can stabilize and not have a negative impact on the market. The domestic manufacturing industry has caused too much cost impact.

3. The second reason is more direct and has greater impact. There are two reasons for this round of commodity price increases. First, the global economic recovery has led to an increase in production capacity and thus an increase in demand for raw materials. Second, global loose monetary policies have caused a large amount of funds, especially US dollars, to flow into various asset markets, pushing up the price. their prices.

In other words, there was too much currency water that allowed commodities to usher in this bull market, but now the world is beginning to tighten monetary policy. Brazil, Türkiye, Russia, etc. have already implemented interest rate hikes to ease domestic inflation. The most fatal thing is that the monetary policy of the United States has begun to change. At the FOMC meeting on June 17, it was mentioned that the Federal Reserve will cut interest rates twice at the end of 2023. This news is really a bombshell and has a negative impact on all types of capital investment. A very big impact. If the United States tightens monetary policy, it is foreseeable that commodity prices will plummet. At the same time, this Friday, a U.S. official who was originally very negative on interest rate hikes actually publicly stated that the U.S. is likely to raise interest rates in 2022, bringing expectations of two interest rate hikes before the end of 2023 earlier. As soon as this news came out, a series of investment products such as gold, US stocks, and commodities all fell rapidly that day.

4. If the first reason leads to a temporary decline in commodity prices, then the second reason will form a long-term suppression. Who knows when the U.S. will raise interest rates. Maybe it will suddenly announce an interest rate hike after a meeting next month, or it may not happen until next year. But no matter what, the tone of interest rate hikes has been set, and this expectation is actually the most terrifying. As the saying goes, long-term pain is worse than short-term pain. If interest rates are not raised but there is always an expectation of interest rate hikes, it is long-term pain. Commodities may indeed end this bull market under the pressure of long-term pain. Even if there are several price pullbacks, it will only induce bullishness.

The short-term rising cycle of commodities has changed. Once the cyclicality of any investment market changes, the short-term impact on market prices will be in the form of a trend.

Let’s first review the reasons for the start of this bull market in commodities. The essential reasons are the over-issuance of the US dollar and global inflation. These hot money did not circulate when the epidemic initially spread. Coming to the real economy, we can see that before the third quarter of 2020, both the price of copper and the prices of other commodities were basically fluctuating at a low level.

Starting from the fourth quarter of 2020, as the United States initially controlled the spread of the epidemic, and European countries began to administer vaccines, and China took the lead in completely controlling the epidemic, it became the only large-scale industrial product manufacturer in the world. In the production center, commodity prices began to show a bullish trend at this time.

The recent warnings of interest rate hikes by hawkish officials from the Federal Reserve, as well as the market's widespread prediction of high inflation in the US dollar, have led institutions to increase their general interest rate hike expectations from 2024 to 2023, or even advance them. By 2022, that is next year. At this time, we found that the exchange rate of the U.S. dollar began to strengthen, the interest rates on two-year U.S. Treasury bonds began to rise, and the interest rates on 10-year Treasury bonds began to fall. This shows that investors are not optimistic about the long-term development of the U.S. economy.

Therefore, the short-term strengthening of the US dollar and the advance prediction of the Federal Reserve's interest rate hike have caused the current commodity cycle to show a changing trend in the short term. This impact is not limited to current commodities, including gold, US stocks and other global capital investment markets, which will have corresponding negative impacts.

It's early. I can only say that the old cow occasionally lowers its head to eat grass, and then continues to climb up after eating. It will not climb over the top of the mountain and go down the mountain without eating the "Tianshan Snow Lotus" at the top.

There are many factors for this surge in commodities, such as: 1. Affected by the easing of the epidemic, countries and regions are scrambling to restore the economy and stimulate production, and some commodities are in short supply. Since spring is generally the start-up season and the peak season for bulk commodity consumption, due to the impact of the epidemic, production was restricted and suspended in the previous year. Factors such as workers being unable to come to work have contributed to rising commodity prices.

2. In order to divert its own contradictions and risks, the United States has been printing trillions of U.S. dollars. It is still printing trillions of U.S. dollars. Countries are forced to follow suit, leading to slow global inflation and future inflation. It will get heavier and heavier. Inflation generally refers to rising prices and devaluation of banknotes, but commodities have, not surprisingly, taken off again and risen again.

3. There is no shortage of smart people in the world, and there is no shortage of speculators and investors. In this bull market of commodities, there are many speculators of all kinds, such as some speculators who take the opportunity to hoard and speculate in commodities. Some manufacturers make false reports or conceal reports, or limit production, etc. Some financial speculators took the opportunity to go long and short, etc. As the saying goes, if you don't open for three years, you will make ten years if you open! A good market trend is enough for these people to eat well.

Of course, in addition to the above factors, there are other factors, such as war, economic war, etc.

So has this bull market reached its peak? Looking at various factors, it is obvious that we have not reached the top!

First of all, the epidemic has not completely disappeared. Its impact is still there, but it is slowly decreasing, but no one knows whether it will come back again.

Secondly, the United States still has its own contradictions and is still trying every means to print money.

In the end, investment speculators are still there. Speculators may get off the market for a short time, but investors generally hold it for a long time. In the future, after investors get off the market, speculators are making crazy bets for the last time.

From the above, it can be seen that the factors for this wave of commodity rising prices have not completely changed and are all in progress. The bull market has not peaked and will still rise again in the future. As expected, this wave of market prices should be a big one. .

It won't end in such a short time!

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