Dollar Decline Spurs a Bullish Turn for Commodities

Deep down, we knew it all along. Over countless lunches at Mick O’Shea’s, we knew we were on the right track…but we just couldn’t put our finger on it.

Finally, a study released today confirms our suspicion. The ultimate investment class of the last generation…and perhaps the next…is…


Wine Price Performance

That’s even better than gold. Of course, we’d be remiss not to add – you can’t drink a Krugerrand when the going gets tough.

(Check the study out: Raise Your Glass: Wine Investment and The Financial Crisis. Heh. We may have missed our calling.)

While you’re out stockpiling wine today, pick up some steaks, too…beef prices are soaring.

Just as we, with the help of our buddy Doug Casey, have forecast in these pages, the credit crisis put a stranglehold on the already wheezing cattle industry. The USDA claims worldwide beef production has declined three years in a row. The ethanol hoax and rising corn prices haven’t helped matters much.

Add in the abnormally cold winter we just lingered through and cattle are starting to seem scarce. Cattle futures are up 20% already this year, says The Financial Times this morning. Traders are now flirting with the $1 a pound mark, a pre-credit crunch high.

If the falling dollar doesn’t find some support soon, all commodities will rise, says our resource trader Alan Knuckman. “The dollar may be marking a reversal from the uptrend to recent 10-month highs. This break is what we have been looking for to accelerate the commodities rally.

US Dollar Decline

“As you can see from the chart above, the dollar has broken well below its 50-day moving average – marking a bullish turn for commodities. Assuredly, I’ll be keeping a close eye on this potential dollar reversal in the next week.”

If Alan is right, now would be a good time to begin trading commodities again. Those who’ve been following Resource Trader Alert have enjoyed an average gain of 56% on trades Alan has recommended. In fact, “readers could have made SIXTEEN TIMES THEIR MONEY following my buy and sell recommendations in 2009,” he says.

Addison Wiggin
for The Daily Reckoning