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A new high for metals

Another unpleasant milestone of sorts: this index of industrial metals price hit a new all-time high last week. The commodity price rally is not over, it would appear, and it is likely being driven by a combination of strong global demand which exceeds the capacity of commodity producers to meet, and accommodative U.S. monetary policy. The latter is playing a more important role these days, as the dollar continues to slide. Importantly, I note that metals prices are still well below their 2007-8 highs when priced in yen, euro, swiss francs, or sterling. Metals prices are relatively strong when compared to their historical ranges, but the bigger news is that the dollar is exceptionally weak. This can only aggravate inflationary pressures in the U.S.

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