Where we stand

With the correction in the commodities full upon us, I thought it would be useful to talk about some of the positions we like and have. Now it is no secret that we have come off a very large run in the commodity sector. How we got there is important. I say that because I read some very smart economists are calling for deflation. While I agree, the points I disagree are that this deflation will be for the U.S. for 2 billion people it is inflation. We are now experiencing import cost rising as our Asian manufactures are asking for price increases.

Anyways, the point here is that if we take and look at our portfolio, we can roll out to another month and get a 10% cash infusion. Not ideal, but much better than I know anywhere else with out taking on the high risks. I am not so sure I want to do this at this time. I may regret this decision later. So I am content to sit on the positions for another week and see if a larger rally wont give me a better return rolling to the next month.

These corrections can be very gut wrenching I know. It is times like this where it is hard to stay the course. You read every day that oil is coming down due to consumers using less and that this drop is demand driven etc. Yet when I study and read the international scene, 2 billion Asians are buying not only any company that will produce natural resources for them but also anything tangible (like our own Chrysler building) I cant help but think we are going to be paying much more for our natural resource consumption.

Are we in a recession? Of course, we have been since January. Yet we have seen prices jump on most commodities during this time.

I for one am still convinced of the course we established almost 4 years ago. I may be stubborn and pay the price dearly, or this may be one of the last times to buy gold below 800 an ounce for a very long time as well as all the other commodities.