Tuesday, May 4, 2010

Coomodity Markets Signalling Inflation

That's the message behind recent upturns in heating oil, gasoline, crude oil and gold according to Toby Connor.

I'm going to start off by stating that I don't think Bernanke is going to "get away" with the insane monetary policy he's chosen. Printing trillions of U.S. dollars, cutting interest rates to zero, trying to manipulate the bond market and generally tampering with the natural finacial market forces is going to have consequences....

I'm afraid Bernanke has probably let the inflation genie out of the bottle with his reckless actions. That means surging commodity prices. The fact that almost all commodities resisted the stock market decline on Friday is an ominous warning sign.

He also points out that strength in the U.S. dollar is better described as greater weakness in other currencies. There's no better way to square the run-up in the greenback with those commodities' run-up in U.S. funds.

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