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Peter Goodburn: Inflation is Coming Back With a Vengeance

Tom welcomes back Peter Goodburn from Elliot Wave International to the show.

Peter explains that a super cycle refers to a long-term pattern in commodity prices, which can last for decades. Goodburn presents a quarterly chart of the Bloomberg Commodity Index, showing a typical Elliott wave, five-wave pattern that progressed from the Great Depression lows in 1933 to the late 2000s. Each wave represents a distinct phase of the cycle, with wave one lasting until the 1960s, wave two extending into the late 1970s and early 1980s, wave three leading to gold’s initial all-time high, and wave four ending in the late 1990s. Wave five reached its peak just before the financial crisis in 2008. He cautions against using the term “commodity super cycle” for more recent periods and explains that the current phase is actually a counter-trend phase within a larger long-term pattern.

Goodburn predicts significant upside in commodities, particularly in oil and copper, over the next two to three years. He advises investors to have a methodology, such as Elliott Wave, to determine market lows and to approach investing with a cautious mindset.

Peter also covers the relationship between commodity prices, inflation, and interest rates. He believes that there will be bouts of inflation in the coming years, leading to a rise in commodity prices. He predicts that interest rates will rise again, contributing to another surge in inflation. However, he cautions that a sudden surge in interest rates could have negative consequences for commodities and trigger a significant drop in stock markets.

Lastly, Peter touches on the relationship between the dollar and precious metals. Goodburn expects the dollar to weaken this year and recommends investing in precious metals as a hedge against de-dollarization. He provides some targets for gold and feels that silver and platinum will also outperform. Gold miners may offer strong upside potential, but Peter also recommends physical precious metals as a means to mitigate counterparty risk.

Time Stamp References:
0:00 – Introduction
0:48 – Commodity Cycle Theory
15:45 – Equities & Risks
20:20 – Inputs & Inflation
27:06 – Fed Control Vs. Markets
31:44 – A Global Phenomena
36:23 – Dollar Short-Term Outlook
42:39 – Elections & Confidence
45:18 – Precious Metals & Dollar
50:30 – Timing & The Metals
55:50 – Slowdowns & Base Metals
1:01:25 – Wrap Up

Talking Points From This Episode

  • Peter explains the concept of commodity super cycles and predicts significant upside in commodities, particularly in oil and copper, over the next few years.
  • Goodburn believes that bouts of inflation and a rise in commodity prices will occur, fueled by rising interest rates.
  • Goodburn expects the dollar to weaken this year, recommending investment in precious metals as a hedge.

Guest Links:

Peter Goodburn is the founding partner of WaveTrack International. His trading experience spans back to the late 1970s working then in the commodities business for exchange members and their clients. In those earlier years of his career, he created the first OTC (over-the-counter) copper option product based upon the Comex (New York) contract around the mid-eighties, and in the same period, devised Opval, an option-evaluation software program that is currently used in many of the major market-making institutions of today.

His fascination with price activity and how that related to the news flow within the markets captured his imagination early on. Peter’s first annual diary of 1978 records his notes and remarks on how the interaction and relationship of fundamental news and price movement often contradicted themselves. Some years later, this was to ignite his interest in causal theory and naturally, the Elliott Wave Principle.

He was first introduced to the Elliott Wave Principle in the mid-eighties listening to daily updates of financial commentary by Bob Beckman on LBC radio (London Broadcasting Company). This led him to the work of Frost/Prechter and their first re-publication of R.N.Elliott’s (1871-1948) original treatise of 1938 (The Wave Principle) and 1946 (Nature’s Law – The Secret of the Universe), entitled “the Elliott Wave Principle” (1978). Peter’s a self-proclaimed purist of the Wave Principle but has developed a unique approach of geometric Ratio & Proportion that is instrumental in maintaining a dispassionate and objective view of the market. He has applied this analysis to every major asset class over the years, stocks, bonds, currencies & commodities, and promotes the importance of interdependency of the combined group.

Peter has been a member of the U.K.’s Society of Technical Analysts (STA) for over twenty-five years and is a Certified Financial Technician recognized by the International Federation of Technical Analysts (IFTA). He has taught the Elliott Wave Principle to students at the London School of Economics as part of the STA’s diploma program and is a member of the Foundation for the Study of Cycles and the Society for Chaos Theory in Psychology and Life Sciences.

He has published many of his forecasts in various journals over the last twenty years including Currency Confidential, Managed Derivatives, Investment Management, The Ringsider, Market Technician, and quoted by many others, including Metal Bulletin, The Speculator, Focus, Fund Investment, International Herald Tribune, and Reuters. It has brought him in contact with the many diverse fields of finance, delivering presentations for major industry governing bodies and many corporate clients.

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