Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.


 In previous commentaries several months ago, I warned of the beginning of supply inflation. I haven't heard economists mention this type of inflation during the crisis. We are now I believe, beginning to enter a phase where the cost of certain commodities are going to esculate in price. I call that inflation. I believe it's coming sooner than later. Normally however, economists view inflation as an increase in the price of goods resulting from too many dollars chasing too few goods. They reason therefore that inflation is somewhere off into the distant future because the catalyst needed to ignite inflation is improving employment levels to where additional income or dollars are injected into the market place. So until that happens they reason there will be no inflation. Using that recipie for inflation, most believe there is nothing to worry about from the inflation front anywhere in sight.
  In my opinion they couldn't be further from the truth. I see oil, copper, uranium, metallurigical coal and other commodities increasing in price irrespective of demand levels. Welcome to the era of supplier producers demanding higher prices for goods accompamnied with a refusal to sell for a lesser price. You might ask how this becomes possible when demand isn't increasing. The answer is that supply becomes in-elastic in the sense that availablity of credit restricts competitors from  ramping-up additional production. Now you might ask where are the examples of this sort of action implemented by producer suppliers. As an example, I refer to Quatar an OPEC producer who recently raised prices 10% for the price of oil  they sold to China during the month of August of this year.  Additionally, supertankers who haul half of the world's oil have demanded higher rates. These  demands enable producers to lock in raised prices for commodities. This is the type of catalyst that propells an increase for certain commodities irrespective of the level of demand. Now when you add to this the additional problems for the currency market as a result of printing huge amounts of "I owe you's", prices eventually become volatile for commodities as they move higher. Now consider the present devaluing of the US dollar and the skeptisim surrounding the dollar's worth then it's no wonder that the price for gold is going to appreciate even though gold demand from jewellery has fallen off. Therefore, I look to see the price for precious metals to increase mainly as a result of a diminishing value for the US dollar currency caused by a huge debt and an exponential increase in the supply of printing dollar I owe you's which includes other countries as well. Foreign countries will move away from the US dollar preventing the US dollar from becoming a safe haven during risk aversion. And also look to see other countries distance themselves from the US dollar so as to prevent the US from exporting their huge fiscal debt from the domestic market  to the world markets via a common currency reserve. The global market will resist against any attempts to export the USA national debt. LOL Looking after your money. Disclosure: long gold and uranium producers.