DougM

Gold: Not an Effective Hedge Against Inflation

aitvaras, I believe you're mistaken about the CPI - it does include food and energy costs, and this year social security recipients got almost 5% as a COLA resulting largely from these factors. CNBC often quotes the so-called "core" rate that excludes these items, which, as Bill Fleckenstein likes to say, is "inflation excluding inflation". That number can be very misleading, but it's not the number used for COLAs etc. Now, you could make the argument that the CPI used for COLAs is also inaccurate due to hedonic adjustments, improper weighting, owner-equivalent rent, etc., but that is a different argument.

Is the Commodities Bull Market Over?

FWIW I think you're right, but as we've seen this year, there are limits to how far prices can rise before they choke off the very economic expansion that fuels the boom in the first place. The market needs to find a balance between continued world-wide GDP growth and rising commodity prices. Ultimately, it will have to find substitutes for the most constrained resources or the growth simply can't continue.

Commodities Gone Wild

How is it that the same bears that were trotting out charts of parabolic house prices during that bubble are apparently blind to the exact same thing happening in an asset class they like (commodities generally, gold particularly)?