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Hurricane Rita is on her way, writes David Fry, founder and publisher of The ETF Digest. The Fed is ready to act; Germans are in denial; commodity prices, led by energy and metals, ramp higher; congressmen and the president are trying to outspend each other; and it’s a wonder stock prices did as well as they did yesterday. Clearly commodity market investors believe that inflation is upon us. There is no other message one can extract from overall commodity indexes. Take a look at these charts:

A resolute and aggressive Fed can halt price increases at the cost of hurting economic growth. Sometimes that’s the only choice.

CRB chart

gold chart

EOD chart

XLE chart

So, with all this news the dollar should be falling right? I guess not since it seems currency investors may be focusing on higher short-term US interest rates coupled with euro turmoil following the German vote.

dollar chart

My wife doesn’t pay attention to much of what I write about. She looked over the menu of securities and ETFs we cover and only bought two for her IRA—GLD and XLE. Maybe she should take over, eh?

More tomorrow after the Fed does their thing; however, as much attention will be focused on the weather maps as on Greenspan.

Related:

  • ETFs mentioned in this article (clicking on a link pulls up articles for the ETF in question): XLE.
  • Articles about the gold ETFs, GLD and IAU.
  • Other articles from The Gold Stock Blog (in beta, though the RSS feed is up and running).
  • Other articles from The US Market Blog.
  • The complete list of funds (and links to articles about them) covered by ETF Investor.

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Source: A Bull Market for Commodities, Gold and Energy (ETFs: GLD, IAU, XLE)