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Historically, the final quarter has always been considered to be one of the most lucrative periods of the year for commodity traders – And once again, that trend, is certainly living up to expectations!
It's no secret that the global markets have entered an exciting new phase in monetary policy as central bankers across the world ramped up their fight against rapidly surging inflation.
After being criticized for being slow to recognize inflation, the Federal Reserve and its central-banking peers have embarked on their most aggressive series of rate hikes since the 1980s.
As a result, aggressive moves specifically from the Fed in recent months have dramatically strengthened the dollar – raising concerns among leading economists that the U.S currency will be the next asset bubble to burst.
According to Morgan Stanley – “such U.S dollar strength has historically always ended in some kind of financial or economic crisis” and that's the exact direction we are heading in again.
In recent weeks, a long list of Wall Street banks and international organization from the United Nations, World Bank and IMF have warned that an overly aggressive Fed tightening policy, combined with a surging U.S dollar – “risks breaking the financial markets and inflicting worse damage globally than the financial crisis in 2008 and the Covid-19 shock in 2020”.
Growing backlash against the Fed comes at a pivotal moment – following a significant move from The Bank of England, who was forced to revert to back to unprecedented “Quantitative Easing” measures, in an emergency attempt to avert a full-blown global financial meltdown.
The Bank of England's monetary policy U-turn sent over 27 Commodities ranging from the metals, energies to soft commodities skyrocketing to multi-month highs – with many notching up impressive double-digit gains in a matter of days.
The Bank of England's actions represent the first big intervention from a G7 central bank in this monetary cycle to avert a global financial crisis – And it may not be the last!
There can be no denying that the explosive combination of excessive fiscal debt, speculative asset bubbles and persistent inflation makes the current economic environment truly precarious.
At the same time, the Federal Reserve is facing one of the worst predicaments of its existence as it continues hiking rates aggressively into a weakening economy.
Whichever way you look at it, the writing is already on the wall. Sooner or later the Fed will have no other option, but to turn back on its money-printing presses and inject massive liquidity into an already inflationary environment.
The big question now is will the Fed raise rates one more time this year, before reverting back to quantitative easing again?
Only time will tell, however, the one thing we do know is that extraordinary times create extraordinary opportunities and right now, as traders we are amidst “one of the greatest wealth transfers ever in history”. The time to start making money is now!
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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