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Commodities: It's Still Only The First Inning

|Includes: iShares China Large-Cap ETF (FXI), GLD, GOLD, MEE, SLGLF

If  you have been aggressively long commodities of every size, shape, color, and flavor, as I have been all year (http://www.madhedgefun...), then you just had one of the best trading months of your career. The CRB index rocketed by 17% in May, the best move since the early days of the first oil shock in 1974. That year I spent weekends driving my Volkswagen van from Los Angeles down to Mexico, where I filled it with jerry cans of gasoline, because it was still selling for 25 cents a gallon there (an early attempt at arbitrage). I finally sold the vehicle and used the cash to buy a one way ticket to Japan (remember that John E?). My favorites went up the most. Crude leapt 29%, Silver clocked in a 23% return, and gold was up 9%. The producing stocks also did spectacularly well. Coal producer Massey Energy (NYSE:MEE) soared by 44%, dragged up by oil, while my beloved Freeport McMoran (NYSE:FCX), with the world’s largest gold and silver reserves, rose by 30%. While these things are all superheated on a short term basis, the ten year agreements are still good. You can find massive Chinese buying behind almost every one of these.