SP 500 Sectors and Commodity Sectors

Note the previous entry for SP sectors. While gold is getting all the media hype (even though they were oblivious when it pulled back to long term demand at 700), when looking at all commodities, crude oil and industrial metals look interesting for several reasons. First, the crude to gold ratio is at multi decade lows. In fact, we have not seen such underpricing in crude since before 1990. Couple that with OPEC cuts of approx. 4 million bpd, potential disruption of our Canadian tar sand imports (due to new political agendas), innumerable geo-political issues, and it is very hard not to love black gold here. Oh, and there is that 9 trillion dollars the US government just printed....

The second component that make both crude and base metals compelling is the recovery of China. Unlike the US, they do not have the debt ratios we have and therefore the stimulus is likely to be more effective faster there. That translates to increased demand and continuation of the greatest industrial revolution the world has ever seen. 

Therefore, Gold and Silver on pullbacks for long term inflation fighting is sensible, but it seems shorter term Crude and Base metals could shine on like little crazy diamonds as Pink Floyd might say....