Summary
Phil Anderson uses copper’s breakout and mainstream headlines about commodity shortages to argue that markets are confirming a late-stage position in the real estate cycle, drawing a direct parallel to similar copper shortage narratives from August 2007. He then tracks the US Dollar Index (DXY) for a potential breakdown, which he views as a key catalyst for both a broader commodity rally and outperformance in international/emerging market equities.
Key Claims
- Commodity shortage headlines appearing in mainstream press (FT, Guardian) are a reliable late-cycle GPS signal — confidence: high
- Copper’s breakout on the LME fits a Mexican Pete pattern and confirms cycle positioning — confidence: high
- The Guardian ran an almost identical copper shortage narrative on 29 August 2007, near the prior cycle peak — confidence: high (direct citation provided)
- New copper supply (Resolution Copper, ~2031 production) will arrive after the cycle peak, causing a price spike then prolonged depression — confidence: medium
- DXY is reversing trend around key seasonal dates (solstices, equinoxes, and their midpoints); point 5 reversal occurred around the December 2025 solstice — confidence: medium
- A DXY rally toward the next seasonal midpoint targets the first week of February 2026 — confidence: medium
- A DXY breakdown below 2025 lows would be a major tailwind for commodities and international equities — confidence: medium
- EEM is forming an extended Mexican Pete pattern; a major breakout into the end of the cycle is plausible — confidence: medium
- Broader commodity index (DBC) has not yet broken out, largely due to oil/energy weighting, but remains close to a major breakout — confidence: medium
- Silver, aluminium, uranium, rubber, and oil are also seeing shortage narratives, consistent with late-cycle patterns — confidence: high
Mex Pete References
- Copper (LME): Described as tracking a Mexican Pete pattern prior to its breakout. Breakout has now occurred.
- DBC (Invesco DB Commodity Index Tracking Fund): Weekly chart shows multi-year basing pattern — flat top near $24, higher lows since September 2024. Described explicitly as having “hallmarks of our Mexican Pete pattern.” Awaiting breakout confirmation.
- EEM (iShares MSCI Emerging Markets ETF): Monthly chart over 20 years shows an extended Mexican Pete pattern forming. Breakout not yet confirmed; framed as a late-cycle opportunity.
Stock Picks / Signals
- VAU (Vault Minerals) — Australian portfolio: Stop loss raised to $4.70.
- HSN (Hansen Technologies) — Australian watchlist: Removed. Ongoing pullback is invalidating the Mexican Pete pattern.
- GOAT (VanEck Morningstar International Wide Moat ETF) — Australian watchlist: Added (entry rationale appears to have been cut off in source; full detail not available).
- DBC (Invesco DB Commodity Index Tracking Fund) — US watchlist: Remain on watch; no entry signal yet, awaiting breakout above ~$24.
- EEM (iShares MSCI Emerging Markets ETF): On watch; no entry signal stated.
Predictions / Forecasts
- DXY likely to rally toward the seasonal midpoint around the first week of February 2026 before potentially reversing lower.
- If DXY breaks below 2025 lows, expect dollar weakness to resume, boosting commodities and international equities.
- Resolution Copper project (Rio Tinto/BHP) expected to reach production around 2031, likely arriving after the real estate cycle peak — anticipated to coincide with falling demand, creating prolonged commodity price depression post-spike.
- A broadening commodity rally (DBC breakout) anticipated given cycle positioning, but requires price confirmation.
Notable Quotes
“Shortages of key commodities tend to make the headlines very late in the real estate cycle.”
“By the time new supply comes to market… the real estate cycle is past its peak and a downturn either happened or is underway. That’s a big reason why commodity prices see a short-term spike followed by a prolonged period of depressed prices.”