It seems that the prospects for commodities keep on getting better! Every which way we look we see more evidence of support for higher commodity prices over the coming months. This flies in the face of what "deflationists" continue to preach with enthusiasm! Yet the evidence is there and the broad trends appear decisively strong! What is the evidence? Aside from the bullish appearance of commodity indices, like the CRB, as we see it the evidence goes something like:

• Rising spread between in inflation protected vs. non protected treasuries,
• Multi-week highs in spot commodity markets,
• Multi-week highs in the Baltic Dry Index,
• Bullish breakouts of Gold in non USD terms and an impending multi-week high of gold in Aussie dollar terms,
• Multi-week highs in our own "proprietary" commodity index (an index of coal, rubber, pulp, wool, and polyethylene).

We would not take anyone piece of "evidence" seriously on its own, but when they all confirm each other we take them very seriously.

Spread between US 10 Yr and US 10 Yr TIP

CRB Spot All Commodities Index

Baltic Dry Index

Gold in AUDs

Proprietary Commodity Index

It seems that a perfect commodity storm is gathering and its intensity is likely to surprise even the most liberal member of the inflationist camp!