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If you haven't yet seen the movie: "An Inconvenient Truth" in which former vice-president Albert Gore Jr expounds on the forthcoming perils of Global Warming, you could do worse than spend the time viewing it at least once, but if you are as spellbound as I was, you might end up viewing it a few times or re-winding it for a second look at some of the breathtaking comparisons of where we have come from over the past Century to where we are today in what looks like a thawing Ice Age. And, if it were not for one of Britain's networks, an ITV report from Antarctica yesterday on CNN, or the fact that World Grain markets exploded to "Limit Up" across the boards last Friday, we might've chosen a different theme to write about today, but one cannot escape a mosaic of building interconnectivity among markets that could impact our lives beyond imagination perhaps even as soon as later this year. For the first time in eons, Grains did not just rally into the fall after a flat to down post harvest summer, but they literally have exploded higher as news of perhaps one of the most severe droughts on record has Australia, a normally major grain exporter, being forced to import grains for the first time in modern history.   We have been thinking for a long time now, just as the way Gold and Silver had begun to move inexorably higher, that with some six billion plus inhabitants, increasing freedom and growing prosperity, it would only be a matter of time before grain markets would not only soar, but could potentially eclipse the spectacular prices witnessed back in the 1970's. When markets move to a Limit Up condition, as they did Friday and last year did for the first time in 26 years in the Gold and Silver markets, they are telling us that the whole World wants to buy Grains or Metals at that moment and because they have moved their maximum permissible daily limits, that those who are short are at some peril of being locked into an ever increasing losing position if they're unable to exit in due time.   When Cattle went limit down a few years ago on the last major "Mad Cow" scare, those markets were locked limit down for weeks and every few days, their permitted ranges were expanding, such that those who were long and either did not get out early or were unable to get out, faced catastrophic losses beyond anything the imagined...   This is one of the risks of being in futures and something similar might be on the cards for Orange Juice futures in coming weeks for those caught short Orange Juice in a replay of 'Trading Places', if reports of damages are true.   About a dozen years ago, Coffee Futures went through the roof for the same reasons and we suspect, this year could be a deja vu performance, as like Grains, Coffee has been uncharacteristically strong in the fall of 2006 and could be anticipating a big year ahead, just as grains have been doing, with the price of Rice also rising strongly.   The fact is, with the warmest years on record of the modern era in this new Century, crops have less water at their sources, because much of this water comes from glaciers that no longer exist and many former lakes around the world have evaporated or dried out completely. The burning heat of the summer sun trapped in a greenhouse effect, caused by all-time record levels of CO2, over what appears to be many a millennia, does not bode well for the future and neither does the prospect of getting away with another storm free summer that 2006 fortunately turned out to be. If 2007 turns out to be another 2005 and we get hit by another Katrina or Rita, the prospect of losing 25% of US Oil production overnight could again become a reality only this time, the consequences could potentially be much more devastating than that of the past, because with World growth barreling on, and prices having dipped to where SUV'ers are once again rejoicing and not conserving, Global oil demand could reach new heights by this Summer perhaps at 86 ~ 87 Million BPD, Barrels per Day and Global output might not be much more than 85 Million BPD, which even if OPEC once again opens up the spigots could quickly eliminate whatever surplus has been recently built up. The other point we want to re-iterate that we have made before, is that it can take a long time for the sky high prices of Oil to permeate the entire Global economy and show up as the core inflation that Wall Street fears. Because just as what happened in the 70's, near hyperinflation showed up suddenly and dramatically almost over-night such that the Fed panicked and raised short term rates to 21% in their attempt to quell inflation. This time around, they are going to lose the battle, because a lot of the coming inflation has not yet showed up, but as sure as Alcoa's all time record Aluminum profits gained from new all time record Aluminum prices, is being reflected by price increases in everything from soda cans to airplanes and automobiles et all...   And with the development of the past months and now past week with Grain prices hitting new multi-year highs numerous products will have to raise prices to absorb the rising prices of Grains, Coffee, Cocoa, Orange Juice and just about everything else including sugar, which last year soared and looks to be bottoming ahead of another major run to the upside that could take it to new heights.   The competition for Corn to produce ethanol is putting the squeeze on Corn as a food product base and this is spilling over into the Soy and Wheat complex, that is now being exacerbated by extreme drought conditions down under that perhaps could also make Brazil and Argentina venerable to the unforeseen effects of Global warming that are simmering under the surface, ready to impact...   Long term analysis of Grain markets shows a 40 year long base illustrating extreme lows ahead of the 1970's highly inflationary era, that has essentially trapped prices in a broad range since that time, culminating in extreme lows at the beginning of this new Decade and Century. One could conclude from this that, just as how Gold was withheld by the $500 barrier for 26 years, the hiatus in inflation is over and portends a new kind of uptrend in inflation that we simply have never seen before that will be the hallmark of a population explosion that could take Global numbers to 9 Billion people over the next half century. Just as with the recent pullback in inflation as evidenced by subdued numbers ahead of Christmas, the underlying core inflation was off the charts with the largest increase in 26 years, along with attendant wage price increases, that are about to be compounded by significant increases in the minimum wage. The hiatus in inflation would appear to be over, just as the brief hiatus in Gold and Silver's price rises were nipped in the bud last week with Silver's stunning "Limit Up" recovery following a pause that just looks like a waypoint in a mega bull move. Trade Well From the Desk of Savant

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