Attention All Bubble Watchers

One of the more peculiar notions born out of the financial media’s perpetual patrol of all that is in the rear view mirror, is that bubbles, having already popped, can continue to “deflate.”

Have you ever tried to deflate a balloon that’s already popped? Try it, and let me know how that goes. That metaphor is more mathematically represented by the chart below that shows you what Commodities (measured by the CRB Commodities Index) have done, in the aggregate, since everything from fertilizer to grain elevators were given Park Avenue valuations.

The good news here is that, with the stimulus associated with a politicized US Federal Reserve creating FREE moneys from the heavens and countries from the USA to Eastern Europe devaluing their respective currencies, we have big thick patches being put on the former commodity hot air balloons that will allow for “re-flation.”

Gold trading up +4.1% week over week last week, and hitting a 2 month high again here today is the most obvious early signal of the commodity “re-flation” that is coming to a theatre near you in 2009. The revisionist CNBC bubble watchers saw this movie before, but right now they are still focused on how it ended versus how it begins.

Our “buy” zone for Commodities is shown below, from 209 to 219 in the CRB Commodities Index.
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