October 31, 2011

Commodity long-term buying may not occur until 2012

LONDON (Commodity Online): A correction lower in the broad commodities market is likely to begin this week and a long-term buying opportunity may not occur until sometime in the first half of 2012, said Shawn Hackett, president of Hackett Financial Advisors.

Hackett continued, last week’s snapback rally was due to a “temporary pause” in the European debt crisis. Some might say “all is clear” to hold commodities again. “I beg to differ.”

“Through the lens I look through, most of the upside has already been achieved and at best markets will remain stable in a generally benign sideways pattern into the end of the year. The eye of the hurricane seems tranquil and filled with hope until the back side of the storm comes out of nowhere and provides an even more lethal blow of destruction to the downside.” He looks for markets to reassess the European debt bailout plan.

Further, he fears the “super debt reduction committee” in the U.S. congress will fail to agree on necessary cuts to maintain the country’s current debt rating.

“Commodities may make “marginal new highs” by year-end followed by a decline into the first half of 2012. This will be the buying opportunity for long-term commodity investors and for end users to procure long-term supply needs,” he added.