According to the Bank of America/Merrill Lynch (BAML) fund manager survey gold is the most undervalued it has been since 2008 and crude oil is the most undervalued it has been since the survey began in 2008:
This makes a lot of sense, however, pessimism surrounding the U.S. economy is almost as pronounced as oil’s undervaluation:
It is this pessimism regarding the economic outlook which has helped to weigh down commodities and stoke renewed concerns of deflation. Commodity prices have generally been a leading indicator for the economy and we have recently begun to see some early signs of a turn in commodities, this is something to keep a close eye on going forward:
CRB (Daily)
Potential double-bottom with strong momentum divergence in the CRB – weekly close above 170 would confirm.