• It's Coming...

    MARKET EDGES

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Commodities have crashed faster and further than the SP500 in 2008. The peak to trough decline (see chart) is a magnificent one – and now that the CRB Commodities Index is trading at 214, down -55% from its nosebleed consensus peak, I am getting bullish.

My bullishness in commodities has taken my current Asset Allocation model to 15% in Commodities today. This is the highest allocation I have ever had to commodities, and I feel pretty good about that. Buying low is what I do, and to all the bulls turned bears out there who think this chart looks like it’s time to start shorting commodities aggressively, I have to submit my favorite Monday Night Football segment one liner – “C’mon Man!”

The US$ is breaking down, and gold is breaking out. This is THE early “Re-Flation” signal associated with the most aggressive global rate cutting party in world history. Since everything “Chindia” that the bulls bought into at the June/July CRB Index highs can’t be forgotten. May I remind the newfound commodity bears of their own investment letters from only a year ago that stated, as if it were gospel, that “its global this time.” Basic commodities have a place in everyone’s portfolio, but only at a price.

Keith McCullough
Research Edge LLC