James Seaberg

Burst Bubble? Commodities' Long-Term Story Remains Intact

This is a good assessment of Davy. We need also to understand that the US central bank needed to do something about price inflation. To lower interest rates and pump money into the economy (= monetary inflation) is very price-inflationary and hurts the dollar. Strangely enough starting 2:30 on Tuesday, the 18th of March, the opposite occurred. The dollar rose and commodities fell.

The fall in commodities was also a concerted action by the Fed and its banking and brokerage minions. Foreign central banks had to buy dollars and the US banks and brokers were told to raise the margins on commodity accounts and go short. Most of the mmargins have now risen to 90% from formerly 25%! In such a way nobody could blame the Fed to have increased price inflation, even though they increased tremendously money inflation. Price inflation usually follows monetary inflation with a certain time lag. But all this money will still creep into the economy and create in the US and worldwide further price inflation. That means the bull market in precious metals and the food complex is by far not over.

In my opinion, we have seen the lows at least in gold. I doubt it will go to 880$ as forecast by some analysts. These prices are buying opportunities. So why not buy today some and next week more.