“Every time you get late-cycle going into the front-end of a recession, you have a massive rally in commodities.”

“Inflation is Inflationary”

Steve Blumenthal, CIO and Executive Chairman of CMG Capital Management took notes at John Mauldin’s 2018 economic conference.

He presented his notes in Jeffrey Gundlach, “Inflation is Inflationary”.

Blumenthal’s opening snip caught my attention.

“I’m bullish on commodities because we are late cycle… You can argue how late we are in the cycle but we are late cycle.

The bond bulls will argue there is more room to run, but nobody is going to say we are in the first inning or the third inning of an economic cycle. The current cycle is the second longest in post war history. And every time you get late cycle going into the front-end of a recession you have a massive rally in commodities. Every time, there are no exceptions.”

Jeffrey Gundlach [CEO of DoubleLine] went on to say, “What I mean by massive is not a 30% gain, it is 100%, 200% or even 400%.” He likes baskets of commodities.

Emphasis Mine.

Twenty-Six DoubleLine charts followed. Only one of them was on commodities. It was on gold.

“We’re also at the juncture in gold, not surprisingly, because it is negatively correlated with the dollar. We see that gold broke above its downtrend line, it’s got the same look. But now we see a massive base building in gold. Massive. It’s a four-year, five-year base in gold. If we break above this resistance line one can expect gold to go up by, like, a thousand dollars.”

“Will it happen? Well it’s not happening right now, but it’s a very interesting juncture. It’s a great time to be buying gold straddles. Because one way or the other this baby’s got to break in a big way.”


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