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With 2019 and its lessons fading into the fog of market history, I think there’s reason to be optimistic on materials, energy, and gold going into 2020. I say that based on a nascent coordinated move higher in oil, copper, and gold on the charts, combined with the fact that many of the big investment banks are calling for the same. Oil is comfortably over $60, continuing its move higher in the face of “prevailing wisdom” (last night’s geopolitical events don’t hurt the case either), and all of a sudden Canadian energy names are becoming more popular as the market starts to look for defensible value within a relatively expensive broader market. Likewise for the miners. Copper is showing signs of life for the first time in a long time, which has taken copper-bellwether Freeport (FCX.US) up over 50% from its October lows (BHP, RIO, and TECK are all up ~20% over the same period). And then there’s that gold quote. Gold has definitively moved up through the psychologically important US$1500 level again, and it’s notable that the yellow metal held in as well as it did in the face of a relatively strong dollar during most of 2019. I get the sense that gold exposure is still minimal for the broader investing public since there is no sense of urgency out there when it comes to the golds. Increased interest, yes, but no real sense of committed bullishness. That’s a good thing, because if this gold move is for real, it could have a long way to go.
