Golden Cross Salvation for Commodities

When it comes to commodities, it’s all about the Way of the Cross.


The Golden Cross, that is.

The indicator, which occurs when the 50-day moving average passes above the 200-day moving average, has been money in the bank for gold, silver, cotton, copper—you name it as the entire asset class surges to new heights.

Cotton in particular has gone parabolic since making a Golden Cross three months ago, its chart more closely resembling the trajectory of the next NASA mission to Mars than a typical structural move higher.

So while Tuesday’s margin increases at the Chicago Merc possibly stand in the way of speculators and the next leg up for commodities, it’s worth taking a look at what has happened for a Super Seven of commodities that have made Golden Crosses in recent months.

The commodities, followed by the date of their Golden Cross, and the percentage gain since:

Cotton, Aug. 9, 77 percent.

Corn, July 21, 55 percent.

Silver, Sept. 2, 42 percent.

Copper, Aug. 17, 18.5 percent.

Gold, Aug. 18, 13.5 percent.

Heating oil, Sept. 24, 11.6 percent.

Crude oil, Aug. 1, 6 percent.

A few notes:

Oil has made a series of Golden Crosses and the opposite, dreaded pattern, the Death Cross, over the past six months, but the move on Aug. 1 represents the most recent break.

Speaking of: Natural gas actually made a Death Cross on Sept. 1 but traders have been undeterred, sending the price up 17 percent since then.

The Golden Cross has been much more positive for commodities than stocks, though it has held up for equities as well.

The Nasdaq tech barometer made the pattern on Oct. 12 and has seen a 6 percent gain since; the Standard & Poor’s 500 is up 3.8 percent since crossing on Oct. 12, and the Dow made its move Oct. 5 and has followed with a 3.6 percent gain (all numbers were as of Tuesday’s close).

So while conventional wisdom puts the respective Crosses as only mildly reliable phenomena over the course of time, investors who have paid heed in recent months have had a, well, uplifting experience.


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