Commodity Price Forecast: Barons 2017 Outlook In Accordance With I Know First

This article was written by David Shabotinsky, a Financial Analyst at I Know First, and enrolled at the undergraduate Finance program at the Interdisciplinary Center, Herzliya.

Commodity Price Forecast


Over the past week, Baron’s had published a 2017 commodities outlook. More specifically, they had explained which commodities they believe will rise throughout 2017. This can be a valuable source of information for investors seeking exposure to commodity investments, whether linked to equities that are correlated with the prices of those commodities or buying into forward and/or future contracts to have a more direct exposure. However, it can be an even greater tool when complemented with technology that can forecast the rise and fall of those commodities. By doing so, investors can cross-analyze the analysis performed by Barons and that of other research-based firms such as I Know First, which utilizes deep learning techniques to forecast over 7,000 underlying assets in the financial markets through empirical data collected with big data. Deep learning, a branch of Artificial Intelligence, is increasingly being incorporated in large businesses and in large financial institutions as well. Click here to read more of the ever growing impact of Deep Learning on the world.

Commodity Price Forecast

Today, many self-learning algorithms are constantly being developed; however, I Know First has a state of the art algorithm that has a clear distinction from the rest of the market at hand today. The algorithm, was developed by Dr. Roitman, who has a vast 35+ years pf experience in the field of AI and machine learning. Every day, the self-learning and self-adjusting algorithm outputs market forecasts with trends of stocks, commodities, and indices over 6 different time horizons ranging between a few days and a year. The main added value lies at the two indicator outputs from the algorithm: the predictability indicator and signal strength. Signal- The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities. Predictability- the actual fitness function being optimized everyday, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Oil Price Outlook for 2017

After much deliberation and tiring meetings, OPEC, an organization made up of the world’s top oil producing nations, came to an agreement on how to cut production, or supply, to boost prices with a constant demand variable. The agreement had as well raised prospects that Russian, a non-OPEC member would as well agree to a cut, and together had help send oil, as represented by brent crude to over $50 a barrel from a yearly low of $26 a barrel. Saudi Arabia for example, which is OPEC’s largest oil producer, has promised to cut output by about 4%. The cuts will take place from January 1st, 2017 and will last approximately six- months. Traders will be especially concerned if both members and non-members will, in fact, cut output. Currently,  “Oil is a $40 to $55 commodity right now,” says Bob Haberkorn, s senior market strategist at RJO Futures. However, many bullish investors are speculating that oil may, in fact, be able to reach $60 a barrel in 2017. I Know First’ self-learning algorithm as well has a bullish prediction on crude oil as represented by B1, a continue futures contract for brent crude oil. oil

Gold Price Outlook for 2017

Over the past year, gold has surpassed most expectations and reached historically acclaimed peaks as well. The reason is because of the high uncertainty in the market throughout 2016, which had included: Brexit, the U.S. elections, a stock market correction, and an overall macroeconomic uncertainty for large economies such as China. Recently, investors have sold gold at an accelerating pace, and earlier last week the commodity had hit a 10-month low, in an inverse correlation with the market as represented by the S&P 500 Index. Though the gold did peak in a price and a market outlook did begin to improve after a post-Trump victory, the main reason for the high sell-off in gold is since Federal Reserve decided to raise interest rates. Gold, a non-interest bearing asset, tends to fall as interest rates rise; because the opportunity cost for investors increases for them to put their money into interest-bearing assets such as bonds or into saving accounts. The Fed raised interest rates by 25 basis points and many invest are that they are set to continue to raise them three more times throughout 2017. The idea being that unemployment levels are low to the point where some are saying they have reached full employment levels, and inflation should be controlled with Trump presidency who plans on increasing spending for infrastructure and other expansionary fiscal policy measures. “Just the threat of three interest-rate increases heading into 2017 means gold probably has more room to go to the downside,” says Haberkorn. Gold is expected to continue to fall. The analysis is in accordance with I Know First’s AI-based prediction for a mid-term and long-term outlook on gold

Industrial Metals Price Outlook for 2017

Trump’s infrastructure plan and a revival of expected demand in China (world’s largest copper consumers) has set investors to take a more bullish outlook on Copper forward prices for 2017.  “You’re looking at an uptick in demand from the two largest economies in the world,” Haberkorn says, meaning the U.S. and China. “Copper is going to be the No. 1 beneficiary.” Earlier this month, on December 1st, 2016, an I Know First analyst had written a bullish article on copper forward prices in 2017. Though copper prices tend to act in a cyclical manner; all else equal, if a rise in demand from the world’s two largest economies occurs this can help boost prices. Using trend analysis, I Know First’s deep learning-based algorithm had detect patterns in the copper market, and predicts a continual price growth in the long run. copper

Agricultural Commodities Price Outlook for 2017

Two commodities that Baron;s discusses that have may have a high upside are dairy-based firms and wheat-based firms. The dairy industry is poised to have prices grow as the government in the U.S. had increased its consumption of dairy products to keep prices stable. With regards to wheat, supply had increased this past year, but prices have stabilized and expectations are high for a price increase in 2017. Using a self-learning algorithm to detect market trends and elimate short-term market noise, I Know First is able to predict a bullish forecast on forward prices of Wheat. wheat

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