The Trade War Will Kickstart This Forgotten Industry

History tells us that trade wars can be devastating for global economies. But fears over the trade dispute may actually be overblown. That’s the message from today’s guest author, Casey Research’s globetrotting resource expert Dave Forest. Read on to see why Dave believes the trade war could kickstart one forgotten industry...

I believe we are just at the start of a monster bull market…

But I’m not talking about bonds or U.S. stocks. I believe we’re kicking off a historic bull market in commodities.

The commodities market is highly cyclical. And you don’t want to get caught in a commodities bear. They can be brutal.

But when commodities run up, they really run. In the commodities bull market from 1971 to 1974, the GSCI – an index of 24 exchange-traded futures contracts that represent a large portion of the global commodities market – returned 371%. In the 1999 to 2008 bull, it climbed 454%. I believe those are the sort of returns we can expect in the years ahead.

But there’s one thing that’s got resource investors nervous: the ongoing trade war.

Today, I’ll show you why those fears are overblown. Then, I’ll reveal an unseen detail of the trade war that may actually help commodities in 2019 and beyond.

Commodities investors, in general, have been jittery over the trade war. But it’s particularly true of mining investors.

In June, the White House slapped a 25% tariff on some $50 billion worth of Chinese imports. Copper prices fell 22% from early June to mid-August.

Other base metals fell as well. Nickel dropped about 23% between June and August. Zinc plunged about 28% over the same time.

But, if you look at the details of the tariffs, you see that none of these metals were targeted. It was finished products such as lasers and laundry equipment that were singled out. But investors assumed the worst and hit the sell button all the same.

We’ve seen a rebound in some of these metals’ prices since then. Copper has jumped about 5% since the end of August. Zinc is up about 6%.

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Gary Anderson 6 months ago Contributor's comment

A little to rosy considering who is in the White House. It could happen that Trump fears the trade war at some point. But he is not posturing. He wants to beat China and damage to the USA is already happening.