Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729
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The outstanding scenario today, is the sharp rise with the mighty US dollar and the pronounced weakness being seen with stocks, bonds, metals and host of other commodity markets. The scenario today is eerily reminiscent of a chapter in my new book, Haunted By Markets entitled, A Strong Dollar= Weak Commodities from October 3, 2014.
Here are a few of opening paragraphs.
“The third quarter of 2014 ended a few days ago and it was the worst three month period for commodities since 2008, when the nation was in the grips of a bout of economic weakness not seen since the Great Depression of the 1930’s. Hard assets across the wide spectrum of commodities took a hard hit with corn prices falling to a five year low, while wheat and soybean prices fell to a four year low. Multi-month lows were seen with precious metals and petroleum. The only bright spot was with cattle, feeder cattle and a few soft or tropical markets such as cocoa and coffee.
None of that, however, is anything new. In my last weekly column entitled, Doing What Is Necessary I stated, This week, the U.S. dollar rose over the 85 level for the first time since the spring of 2010, while at the same time, the CRB Index was trading at a 12 month low and the Bloomberg Commodity Index slumped to a 60 month low. Individual commodities such as grains, gold, silver and a number of other hard assets also dropped to lows last seen 60 months ago. It is no coincidence the dollar is at a four year high and a host of commodities at a four year low.
But here is the rub. Should the dollar close over the, 90 to 92 level, it places the market back up to levels last seen in the years 2004 to 2006. A close over the 94 level, means the dollar is back up to the levels of 2002 and 2004, when commodities per se were just emerging from the Great Commodities Depression of the 1980’s and 1990’s. In other words, the dollar is on course to trade up to levels that in the past brought about deflation cycle for hard assets of all kinds. Assuming, of course, the ‘ol greenback does indeed rise and hold over the 94 level.”
It is interesting to note the US dollar Index this morning is trading at 93.21 up 75 points and into a new, 5 month high. And while the dollar is at a 5 month high, gold is at a 5 month low coupled with pronounced weakness with stocks and bonds. The scenario being seen today is not quite identical to what took place in October, 14 but similar enough to scare those long any market anywhere.
Winston Churchill once said, The farther backward you can look, the farther forward you are likely to see. “
If you want to learn about the history of the Big Four, stocks, bonds, currencies and commodities check out my new book, Haunted By Markets. And dont forget if you purchase my book you receive at no cost 1 full month of my twice a day newsletter, Commodity Insite. Simply go to www.commodityinstie.com and check it out.
The time is 8:40 a.m. Chicago
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Jerry Welch has been in the futures industry since the late 1970’s and is a true veteran of the markets. He has been quoted often in Wall Street Journal and is author of Commodity Insite, one of the longest commodity futures newspaper columns in history. His weekly column has been published each week since the mid 1980’s and is one of the most recognized names in the world of commodities.
Mr. Welch is also known widely as a, “so so” flyfisherman.
His column is published by the Illinois Agri News in La Salle, Illinois, Cattle Today, in Fayette, Alabama as well as Consensus, in Kansas City, Kansas.
He can be contacted at 406.682.5010 for a view of his, “twice a day” market column that includes price forecasts and trading suggestions.