Slope of Hope Blog Posts

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Striking Oil

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I believe we are at the start of a new bull market in oil.  In the famous words of Dave Chappelle, “Oil?  Oil?  Who said anything about oil?”  Isn’t the world swimming in oil right now?  Isn’t every possible tanker and storage facility filled to the brim?  Why on earth do I believe that oil is starting a new bull market?  I’m glad you asked.  Let’s take a look.

Since this is the one and only Slope of Hope, let’s begin by taking a look at some charts.  After that we’ll examine the geopolitical and monetary fundamentals that I believe will also play a role.

Earlier this month Jesse Felder penned the article, “A Generational Opportunity in Commodities?”  He discussed the idea that rising U.S. fiscal deficits is bearish for the U.S. dollar, with one of the consequences being a return to a commodities bull market.  The chart that caught my attention the most in his article is the chart shown below.  This chart compares the Commodity Stock Index vs. the Dow.  As you can see, the last commodity bull market ended in 2008, and commodities have been in a bear market ever since.  This data goes back to 1937, and commodities are now the most undervalued relative to the Dow in that time span.