“Anticipating another leg-down in commodities (and mining stocks) before sufficient stress emerges in markets to force a decisive policy response – which will create an attractive buying opportunity – UBS joins our ranks of the anti-reflexive NEW QE front-running ‘small-crowd’. Laying out five clear signals that keep them cautious: Equity valuations remain well above the October 2011 lows; Positioning is short in base metals and less long in oil and gold – improving this contrarian signal; China’s policy stance is not sufficiently stimulative to trigger restocking, and we see structural declines in commodity intensity there; and, Europe and emerging markets are in the early stages of destocking, with no stocking due in the US; UBS believes that investors will buy gold and gold equities early this cycle – correctly suggesting that it is right to move just ahead of the broader investor community, and buy gold and gold equities now.”
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