This extract from Small Caps newsletter is interesting and foretells strong upward movement in stocks like HRZ; The bit at the end relates well to the experience we've had recently.When all's said and done e-v-e-r-ybody wants a better share price.
In this exclusive interview, the structured trading educator and chart technician warns that equities are dangerously expensive and commodities are quietly setting up for an historic run.
Small Caps: David, you’ve been vocal lately about the potential for a commodity supercycle. Can you walk us through what you’re seeing?
ASX Trader: Absolutely. If you zoom out on a long-term ratio chart of commodities versus equities, you’ll see something extraordinary: commodities are trading near multi-decade lows relative to the stock market. This is the kind of extreme that doesn’t just revert; it slingshots.
Small Caps: What’s driving that disconnect?
ASX Trader: Narrative and liquidity. Over the last decade, we’ve lived through the golden era of passive investing. Central banks flooded the system with cheap money and investors piled into tech, growth and anything with a chart that went up and to the right. All of which has pushed equity valuations to absurd levels.
Let’s talk numbers. The Shiller P/E ratio is at extremes—higher than the Great Depression and second only to the Dot-Com Bubble. The Buffett Indicator – market cap to GDP – is now the highest it’s ever been. That’s not a healthy market. That’s a bubble begging for mean reversion.
The bond market is already flashing warning signs. Both the 2-year and 10-year yield curve, as well as the 3-month vs 10-year, are inverted—classic recession indicators. These are among the most reliable signals in macroeconomics, and they’re screaming that something’s not right.
Meanwhile, commodities are showing signs of life. The gold-to-Dow ratio just bounced off a level that’s only been seen three times in modern financial history: 1930, 1970 and 2000. Each of those marked the start of a major regime shift and, right now, it’s putting in a major reversal.
It’s not a reckless coincidence. The writing is on the wall.
Small Caps: So you’re saying this is more than just a trade?
ASX Trader: Much more. This has the hallmarks of a secular shift. Every supercycle in history – whether the 1930s, 1970s, early 2000s, or post-war rebuilding – has followed a period of massive underinvestment and relative undervaluation in the resource sector. That’s where we are now. Combine that with global supply chain fragility, geopolitical tensions and growing demand from emerging markets, and you’ve got a textbook setup.
And here’s the key thing: money always rotates from overvalued assets into undervalued ones. When something is in its excess phase like today’s AI and mega-cap tech hype—that’s when the crowd is piling in and everyone’s talking about it. But big money doesn’t buy the excess. Big money buys the accumulation. That phase where it’s boring. Quiet. Forgotten. Right now, that quiet accumulation is happening in commodities and energy.
Small Caps: What does this mean for equity investors?
ASX Trader: Most portfolios are dangerously concentrated in the same few themes. Investors think they’re diversified because they hold ETFs but those ETFs are overweight the exact same names. When the unwind begins, it won’t be a slow leak. It’ll be a full-blown repricing.
The opportunity isn’t where the noise is. It’s in the sectors nobody’s talking about yet—energy, materials, agriculture and metals. That’s where the smart money is already rotating into.
Small Caps: And what are you doing personally?
ASX Trader: I’m a technician at heart. I let the charts do the talking. Right now, I’m seeing major breakouts across a range of commodity-related assets: gold, silver, uranium and copper. Oil is close, as well. This isn’t noise, it’s structured accumulation.
I’m positioning accordingly. And I’m educating my students to think independently, manage risk and develop the confidence to act before the headlines catch up.
Small Caps: Final thought for investors?
ASX Trader: Don’t get distracted by the headlines. They’re designed to sell clicks, not build wealth. The most asymmetric opportunities always exist in silence.
Right now, commodities and energy are the silent trade. They’re undervalued, under-owned and setting up for something major. You don’t get setups like this very often. You just need the patience to let the cycle unfold and the courage to get in before everyone else sees it.
What most people don’t realise is that few investors today have ever seen a proper commodity bull market in their lives. They got a taste of it in 2020, but it was short-lived.
What’s coming next could be the real deal.
You’ll see small-cap miners popping off like altcoins in a crypto bull run. You’ll see forgotten names multiplying in value. It’s going to feel like altcoin season but for rocks. And if you know how to read the signs early, it’s going to be absolutely amazing.
Who is ASX Trader?
David Bird, known online as ASX Trader, is the founder of Mastering the Markets—Australia’s largest educator-led trading program that blends rigorous technical analysis with a structured school-style learning system.
The bolding is mine.
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