Commodities haven’t been this cheap in years… The price of oil has fallen 51% over the past 12 months. Sugar, coffee, and oat prices are each down more than 30%. China is a big reason why. China consumes 55% of the world’s commodities, but its economy is growing at its slowest pace in 25 years.
Miners and oil companies are laying off thousands of workers. The Wall Street Journal reports that energy and commodity companies expect to cut capital spending by 14% this year. Here is the good news: huge booms follow huge busts in cyclical industries.
Since 2011, silver is down roughly 70% and gold is down roughly 40% in the same time period, but the question is are we in the middle of what could be the biggest turnaround the precious metals sector will see in the next 100 years?
Like a coiled spring, many of these mining companies are currently exploding. You might have seen some of our recommendations over the past month:
- Physical Platinum: up 4%
- FF: up 24%
- *GCU: up 22%
- *PKL: up 23%
- AGPPY: up 19%
- SWC: up 31%
*GCU and PKL were special trading alerts – shares are set to be converted into FF next month*
Across the board, companies are experiencing violent moves to the upside. Looking at the charts and a broad basket of precious metals companies, we are seeing this trend getting more bullish -- especially over the last couple days -- having some very strong moves up in the commodities markets.
The Bloomberg Commodity Index (BCOM), which tracks 22 different commodities, is up 6% in just over a month. Focusing just on the major gold mining companies, the Market Vectors Gold Miners ETF (GDX) is up 20% in just over a month and the junior mining index is looking just as strong.
Even with the short-term bullishness in the commodity sector, with how bad things have gotten, it's still safe to say that commodities are still hurting and hurting badly. We will only know if we are out of the doldrums after time passes and we look back on this time, but as of right now, October 2015 is showing to be a very favorable time for the commodity sector.
We aren't just saying it; Blackrock thinks the worst might be over for the precious metals commodities as well. They point out that return on capital in the sector has fallen to historic lows, costs and capital expenditure have come down, and many mined commodities’ prices sit well below marginal costs.
A few signs we are really close to or have passed the bottom:
- Mining companies are moving into other businesses. We heard a story of a Canadian iron ore miner starting to sell eggs recently. Another Brazilian mining company is entering the cosmetics business.
- Glencore is one of the world’s largest mining companies. It recently announced big spending cuts. It’s even suspended its next two dividend payments. This is big news, when the best in the world are struggling.
- When you take into account the global fiat Ponzi scheme being worse off now than any other time in history, the time to look into precious metals is now.
With the market turning around, some of the best companies could see returns of 500-1,000%, and even more, in select situations. We have three more gold-silver stock suggestions we will be announcing this year. We are being extreme in this market, only presenting you with the highest-quality companies in the entire sector. Look out for these opportunities and don't let the opportunity of a century pass you by.