SW Richmond

Commodities: Inflation Leaves Investors Little Choice

"The third phase is yet to occur and will be made obvious when thousands of mutual funds and other investment vehicles are created, and the individual investor, after finally losing faith in his tech and consumer stocks, capitulates and converts over to the commodity world."

Everything old is new again. It's 1974. I was here for the first one, and the similarity is positively creepy. We have not yet seen gas lines; the talk at the water cooler is about high gas and food prices, but not yet about actually hedging by investing in same. Right now, all 401(k) choices are US-positive, or at least stock-positive. When the typical 401(k) investor can choose between several commodity funds, and a double-short S&P, then you know you have a bubble.

"Are they trying to force us to continue to throw good money after bad by investing in financial stocks, US treasury paper, and other US stocks?"

Yes, that is exactly what they are doing. The US is the world's last superpower. The USD is the world's reserve currency. The situation you describe, compounded by the US's international debt and intergenerational obligations, make this an epic situation. All tools, repeat all tools, will be brought to bear by the US government in an effort to keep the US from losing its preeminent position. Expect "Homeland Security" to be invoked, as the war on terror is already being used as a reason to clamp down on international gold depositories. Expect capital controls. Expect not to be "allowed" to expatriate wealth. In a few years no one in the US will be "allowed" to "invest" anywhere except the US stock market, and anyone advocating doing so will be roundly criticized as "anti-American".

If you want commodities, or currencies, or foreign anything, get them soon. This bunch in Congress ain't gonna go quietly. Maxine Waters couldn't even think of the word "nationalization", but her vote counts for a hell of a lot more than yours and mine.