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Where Are Commodities Headed? Watch This Indicator

Michael Hainsworth, host of Business News Network (BNN), welcomes Frank Holmes to the program to discuss what Frank says is the best forward-looking indicator for where commodity prices are headed. The purchasing managers’ index (PMI) has historically shown a high correlation with the performance of commodities like oil and copper, explains Frank, adding that GDP is more of a backward-looking data point.

When it comes to gold, however, Frank says that real interest rates (as opposed to nominal rates) are a better predictor of how the precious metal will move, rather than PMI. Watch the full interview to see where Frank believes oil is headed in the next six months.

 

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The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the interview were held by one or more accounts managed by U.S. Global Investors as of 12/30/2016: Agnico Eagle Mines Ltd, Richmont Mines Inc.