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Oil
Oil
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Don't buy commodity indices!

We had such a good, exchange-wide discussion on "the dollar" thanks to @Weston Nakamura and @Jack Farley taking up the mantle after my last video,  I thought we could now approach commodity exposure. With the reflation trade all the rage, how can we best get involved?

I think broad commodity indices are a poor trading vehicle and in the video I detail why? I offer some suggestions for better options. 

What is your preferred way to gain commodity exposure and why? 

https://youtu.be/Fz1YVhS-Mac

The Macro Cafe. Episode #3

Trends remain established, Bitcoin a big winner, asset rotations, sector rotations. 

https://youtu.be/TVabCD0Dvx8

Clean Energy

4 days ago I posted charts of several clean energy ETFs that had bullish price action on rising volatility. Here is the link: https://exchange.realvision.com/post/clean-energy-5ffd15d42c1a8734fa2823b3

These ETFs just had a minor sell-off which was likely. Notice I do not say that I knew there would be a sell-off. I am just looking at the things that would put the risk and reward in my favor. 

So let's say I am bullish on clean energy from some sort of fundamental perspective. This is such a great example of how I would wait for a little bit to take a position. Especially with the new "blue wave" narrative going, clean energy likely has some upside. However, I want to see volatility decreasing, bullish price action and several other indicators before I take a position. 

This is really helpful to minimize the potential initial draw down in taking a position. 

Christopher Moir
Maker of random charts that seem important 2 years later

What do gold miners need in order to mine gold?

Two years ago I found a piece of research hosted by Goldmoney. It was produced by Stefan Wieler and Josh Crumb. There are a total of 4 pieces and I am concentrating on the 3rd.

https://www.goldmoney.com/research/goldmoney-insights/gold-price-framework-vol-2-the-energy-side-of-the-equation

If interested download each of the PDFs as it is only a summary on the website. In the research, Stefan breaks down the reliance on oil of the gold miners. Directly via diesel etc for machinery and power at a remote mine site. Also indirectly rubber for huge machinery tyres lubricants and even the need to shift humans from habitation to mining sites. The scale is important the reliance per company is different as well as different sites within the same company. It is very interesting so go and read it and all the others if interested in this space.

TLDR the report says on average "energy" cost makes up ~50% of gold production costs. Oil and oil derivatives and by-products make up the majority of this cost.

Josh Crumb always highlights the "long-dated energy to gold cost". For this, I use 5 year GC (gold) futures prices against 5 Year BZ (Brent Oil) futures prices.

The scale on the right is how many barrels of Oil will 1 Oz of gold purchase.

Orange is the long-dated price which will remove as many of the short-term volatility of market movements. If we look at the 1 year forward purple line at two points this year 1 Oz of Gold could buy 48 barrels of... (More)