Commodities are Back With a Vengence

As we prepare to wrap up the month of May, one thing’s clear: Commodities are back, baby.

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That’s a 12.3% monthly move for the CRB, an index that tracks most of the world’s heavily traded commodities. The stars have aligned in the favor of hard assets this month: Global investors are collectively more optimistic. There’s a strong reboom vibe emanating from BRIC nations (see below). And perhaps above all, there’s this:

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After falling through its 200-day moving average earlier this month, the dollar index has been in steady decay. The index crashed through another important level this morning — the 80 score, a long-standing point of support. Will the greenback fall further still? Barring a stock market reversal and flight to safety in the dollar, or some kind of wild government intervention (both totally possible), we don’t see what’s keeping the dollar from testing 2008 lows.

The euro is up a cent this week, to $1.41, its highest level of 2009. Ditto with the pound. It’s up to $1.61. The British currency has gained 9% in May, its best monthly showing since 1985…yikes.

But if you own some gold, you’re still in good shape. The once and future money goes for $975 an ounce this morning. That’s a $90 jump from the beginning of the month.

The real commodity winner in May? Silver. The poor man’s gold is on track for its best month in 22 years. At $15 and change, silver’s spot price is up 25% this month.