Remember CRB is heavily weighted in the foods
So, the index lacks the balance to provide a clear picture vis a vis the inflation/deflation issue.
This summer and fall, drought conditions - not demand from excessive monetary creation - has held up food commodity prices. In fact, monetary policy, as I've said in past posts is too restrictive for current economic conditions.
Again, because of the way the index is weighted, input from industrial metals and energy commodities aren't reflected in the current level of the CRB. So, IMO, it's masking the looming deflationary trend, better demonstrated by industrial metals behavior, in recent months:
quotes.ino.com
quotes.ino.com
The Goldman Sachs Commodity Index carries a similar overweight in the energy commodities which are higher than economic demand alone would indicate due to war fears (and what I think will be a bullish supply story in NG, developing later this year)
The gold case isn't based on a bull market in commodities. It's based on the fact that it's the only monetary ASSET which all other financial instruments from debt paper to fiat currencies are only PROMISES to pay.
As the crowd slowly (as always<g>) wakes up to this distinction, the currrent glacial pace of growth in enthusiasm in gold will accelerate.
Patience, Cash and also some physical gold in the LT investment mix, folks. Nothing wrong with gold stocks. But they do carry more risk as well as more reward than the physical.
Isopatch |
