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Commodities update





Here's a long-term look at spot commodity prices. They have risen 38% from their lows of early last year, and are only 10% below their all-time high in mid-2008. Note the huge gain in prices which occurred in the inflationary 1970s, followed by the flat trading range that lasted from 1980 through 2006, a period characterized by relative low and stable inflation. Commodities now appear to be moving in a new, higher trading range, which in turn was ushered in by the Fed's accommodative monetary policy which began in the mid-2000s. The apparently permanent rise in virtually all commodity prices that began in 2007 is one of the reasons I look for inflation to continue to rise in coming years.

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