Currency and Commodity Trading has been a defining thread in Professor Steve H. Hanke's career. From hedging egg shipments on the Chicago Mercantile Exchange as a teenager in Iowa farm country to predicting the 1986 oil crash and leading the world's best-performing emerging market fund, his work bridges academic economics and hands-on market expertise.
Early Exposure to Commodity Trading
Professor Hanke grew up in Atlantic, Iowa — the heart of American farm country, where commodity markets were not abstract concepts but lived realities. Grain elevators, livestock auctions, and the rhythms of agricultural cycles shaped his earliest economic intuitions.
As a teenager, he helped his grandfather by selling egg forwards on the Chicago Mercantile Exchange, hedging the price risk on shipments before they arrived at market. This was not theoretical; it was applied economics at the most practical level.
At age 14, Hanke opened his own trading account and began trading soybeans — making him one of the youngest independent commodity traders of his era.
After graduating from college, he bought and sold a 24-unit apartment building, a transaction that reinforced his preference for financial assets over physical ones and accelerated his transition from commodity markets to currency and financial markets.
Academic Foundations
Hanke's academic career built a rigorous foundation in commodity economics. He began teaching mineral and petroleum economics at the Colorado School of Mines (from 1966, age 24) before joining Johns Hopkins University. His courses at Hopkins blended applied economics with hands-on lessons in commodity and currency markets, and by 2017 were recognized as a "gateway to Wall Street" for Hopkins students.
Through this work, he trained many students who went on to careers in trading, finance, and economic policy.
Friedberg Mercantile Group
Role: Chief Economist (later Chairman Emeritus)
Publication: Commodity and Currency Comments — Friedberg's flagship market letter, which Hanke edited and contributed to throughout his tenure
Current role: Chairman Emeritus, Friedberg Mercantile Group Inc., Toronto
After publishing work on business cycles, Hanke joined the Friedberg Mercantile Group in Toronto as Chief Economist, while continuing his professorship at Johns Hopkins. Friedberg is one of Canada's premier commodity trading and investment firms.
His most celebrated call at Friedberg came in 1985, when he analyzed OPEC's internal dynamics and predicted that crude oil would drop below $10 per barrel. Friedberg built large short positions in crude oil and gas oil based on this analysis. The prediction was fully vindicated when oil crashed below $10/barrel in 1986 — one of the most accurate macroeconomic commodity forecasts of the decade.
Hanke also built short positions in Middle Eastern currencies linked to oil revenues, further compounding the trade's success.
Learn more about this and other major trades →
Toronto Trust Argentina
Role: President
Context: Post-1994 Mexican peso crisis (“Tequila Crisis”)
Outcome: World's best-performing emerging market mutual fund in 1995
In the aftermath of the 1994 Mexican peso crisis, financial contagion swept through Latin American markets. Investors feared Argentina's currency board — the Convertibility Law peg — would be the next to collapse. Markets priced in near-certain devaluation.
Hanke, drawing on his deep knowledge of currency board mechanics, concluded that the Argentine system was structurally sound and would survive the panic. As President of Toronto Trust Argentina, he aggressively purchased Argentine peso-denominated bonds at distressed prices.
When the feared devaluation never materialized, the fund returned 79.25% in 1995, making it the world's best-performing emerging market mutual fund that year. This trade exemplified Hanke's ability to distinguish between genuine institutional weakness and market panic driven by contagion.
Advanced Metallurgical Group N.V.
Role: Chairman of the Supervisory Board
Headquarters: Amsterdam, Netherlands
Hanke currently serves as Chairman of the Supervisory Board of Advanced Metallurgical Group N.V. (AMG), headquartered in Amsterdam. AMG is a global leader in the production of specialty metals, alloys, and metallurgical vacuum furnaces — materials critical to aerospace, energy, and industrial applications. His role reflects his continuing engagement with commodity-related industries at the executive level.
Gold Trading: The Hanke-Cofnas Gold Sentiment Report
Hanke co-developed the Hanke-Cofnas Gold Sentiment Report with veteran trader Abe Cofnas. The report is a proprietary tool that uses artificial intelligence and text-mining algorithms to quantify market sentiment toward gold in real time, analyzing gold-related news from global digital sources and generating an hourly sentiment score.
The report functions as a contrarian indicator: extreme readings on either end of the scale often precede market reversals.
Learn more about Gold and the Hanke-Cofnas Report →
Commodity Market Analysis
In his broader analysis of commodity markets, Hanke has argued that the contemporary environment — characterized by high inflation, low inventories leading to backwardation, the global energy transition from fossil fuels to renewables, and geopolitical shocks such as the war in Ukraine — has created a "perfect cocktail" for a bullish commodity market.
This framework reflects his integration of monetarist analysis (money supply and inflation) with structural supply-demand dynamics.
Learn more about Hanke's major trades →
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Trading Philosophy
Hanke's approach to markets is empirical and monetarist: if you understand what is happening to the money supply, you can forecast asset prices, inflation, and economic activity with unusual accuracy.
His prediction of the 1986 oil price crash (below $10/barrel), his profitable management of Toronto Trust Argentina in 1995, and his accurate 2021 prediction of post-COVID inflation all demonstrate the same underlying framework: track the money supply, apply the Quantity Theory of Money, and position accordingly.
As Hanke has argued for five decades, most market surprises are not surprises at all to those who watch the money supply.
Explore This Topic
- Major Trades — The 1985 oil trade, Argentine bonds, Russian ruble prediction, and commodity supercycle
- Gold — Hanke-Cofnas Gold Sentiment Report and gold-backed currency boards
Related Topics
- Monetarism — The monetary framework behind currency analysis
- Currency Boards — Institutional design for exchange-rate stability
- Dollarization — When countries adopt a foreign currency
- Free Market Economics — The broader economic philosophy
- Ideas & Research — Return to the research hub