Beginning in March 07 through July 08 we saw one of the greatest commodity bull markets in history with prices rising to record highs. The prices of oil, grains and precious metals went wild. This in turn drove up the price of food and gas to over $4.00 per gallon. The culprit at the root of this dilemma was our weak dollar. Investors felt that it was more profitable to hold tangible commodities than declining dollar assets. Now, in December we are faced with another very similar dilemma.The March dollar contract has dropped from 89.25 to 82.68 over the past few weeks. Correspondingly, forward contracts for oil have jumped from 40.81 to 54.09. Wheat has followed the trend rising from $4.71 per bushel to $5.24, soybeans from $7.79 per bushel to $8.75, corn from $2.93 per bushel to $3.59 and gold from $681.00 per ounce to $827(these latest prices were taken at the start of trading 12/15/08). Whether of not this trend will continue is up for discussion. Could it be that we could have deflation in the general economy and commodity inflation at the same time? I don't know. This could be just a bear market rally or it could be the resumption of the upward trend that started in March 07. The best way to get a sense of what is happening is to follow the prices. In the end, it is the price that determines the trend.

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