The Commodity to Equity ratio has returned to record lows.  Jeffrey Gundlach of DoubleLine Funds believes its time for a rebound. 

Key bit:   DoubleLine CEO Jeffrey Gundlach said Tuesday that historical and economic indicators point to a likely buying opportunity for commodities such as oil and gold.

“If you ever thought about buying commodities, … maybe you should buy them now,” Gundlach said in a webcast organized by his firm.

He pointed out that by comparing total returns of the S&P Goldman Sachs Commodity Index with the S&P 500 over the last several decades, there are clearly defined points at which commodities outperformed stocks, leading to a sharp increase in stocks, and vice versa. For example, stocks far outpaced commodities during the dotcom bubble of the late 1990s into 2000. But commodities went on to rally hard until they peaked during the global financial crisis of 2008.

 “We’re right at that level where in the past you would have wanted commodities instead of stocks,” Gundlach said, noting that commodity prices stopped falling in 2016 and the global economy is “definitely hanging in there.” He said he does not see a recession likely for at least the next six months.
Read the whole thing: