(Kitco News) – A look at the monthly continuation chart nearby lumber futures shows a nearly vertical price climb since the beginning of 2018, with another new record high scored Thursday. The lumber chart dates back over 40 years, and this present price rally dwarfs previous cyclical highs. The unprecedented move in lumber prices has most certainly taken virtually all market watchers by surprise.
So what does lumber have to do with the precious metals? All are raw commodities whose prices are very cyclical in nature, and many times volatile, as the markets move to long-term cyclical highs and lows.
An examination of the longer-term lumber chart is a reminder (or maybe even a precursor) that cyclical price highs follow cyclical price lows in raw commodity markets. Both gold and silver markets have likely secured cyclical lows in recent years.
The present moonshot in lumber prices stretches the imagination regarding how high a raw commodity’s price can surge during a move to a longer-term cyclical high. Don’t rule out other raw commodity markets making moonshot moves to record highs in the coming few years–or maybe sooner. This includes the precious metals markets.