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  • CCI Signalling Resumption Of Inflation And Doom To The Bond Markets 0 comments
    Dec 11, 2012 4:27 PM

    The CCI (Continuous Commodity Index) is the benchmark for global commodity prices and below is its 4 Year Weekly Chart.

    Fed has been able to keep rates low on the basis that inflation has been controlled, and since the end of QE2 around July 2011, commodity prices have STOPPED increasing.

    (click to enlarge)H&S Bottom - CCI 4 Year Weekly Chart

    ECB-Draghi OMT and USA Drought provided some rally at point C.

    QE3 came in with a ''pinch of salt'' (Fear of Elections & Fiscal Cliff) which cappedthe hedge funds and smart money from initiating 'ALL OUT RISK ON'. And the Fear itself caused CCI to pullback a bit post QE3 as shown by line D.

    Its Making a Clear H&S Bottom (marked by GREEN), which it will take out once it advances above the Green Resistance Trend Line. This will be Once smart money senses that both Fiscal Cliff is about to be CAN-KICKED and Debt Ceiling about to be Raised/Removed.

    If inflation in commodities is clearly evident then global risk capital along with sovereign wealth (Chinese & Others) will scramble for inflation hedges, and will be very positive for Gold.

    At that point, Fed will loose complete control of the Bond markets because keeping rates at zero will bring a hyper-inflationary depression, and raising rates will killthe recovery and push the economy into a deflationary depression.

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