Forecasts suggest that the global economy is likely to shift from an economic recovery to Stagflation in the coming months. Even Fed Chair Jerome Powell has finally admitted that Inflation will jump this year.
His comments follow U.S Treasury Secretary Janet Yellen, conceding she was “wrong” last year about how severe inflation would be.
“There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly, that at the time I didn’t fully understand. But we recognize that now,” Yellen said.
Looking back throughout the whole of 2021, the Federal Reserve played down the biggest year-on-year rise in inflation seen in more than four decades – characterizing the record spike as “transitory”, which inevitability will always be remembered as the worst inflation call in the history of the Fed.
Fast forward to today – inflation is running at multi-decade highs around the world and still rapidly accelerating.
If inflation continues to surge at the current pace across the world, then we’re only months away from a return to double-digit inflation on the same scale last seen in the 1970s.
As traders very well know – every 1% rise in inflation – ultimately equates to a 10% move higher in Commodity prices.
With inflation now running between 8-9% across many of the world’s major economies – it comes as no surprise that a total of 27 Commodities ranging from the metals, energies to soft commodities have tallied up astronomical double to triple digit gains, already within the first 6 month of 2022.
And this is just the beginning!
A long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have described commodities as their “preferred asset class over the next decade”. Last month, Warren Buffett, also joined that list – revealing that his biggest investment ever is currently riding on the Commodities Supercycle.
In the words of Buffett, “the Commodity markets right now, represent one of the greatest generational opportunities of our lifetime, not to be missed.”