For a while now, on each pullback in Gold and Silver, we've been recommending to take advantage of these dips to try and acquire what temporarily undervalued assets you can, before something unexpected comes out of the blue that could send most all of the metals and perhaps other commodities soaring. Just because the anti-American ballyhoo and bravado surrounding Cuba's summit and the UN assembly may have died down, the mosaic behind the scenes is still there and in a way North Korea's Nuclear test may be just the beginning of a long term chain reaction, that with the prospect of sanctions being levied against both the DPRK and Iran, the witches brew of consequential developments may already be in the making, that are already rocking markets in anticipation of events we cannot predict...

Markets have an uncanny way of seeing the future ahead of time and ahead of the Chernobyl disaster, Grain markets had already started to rally and when the news broke, Grain markets soared in reaction and with good reason, since much of Europe suffered measurable fallout...

We have been talking about the probability of a major bottom being established in the Grain markets in the early fall, because of a number of early warning signs that have been symptomatic in identifying the beginning stages of a major bull run in grains in times past and now we can categorically state, that not only could we be witnessing the mother of all Grain bottoms in the making, but the mother of all Grain bull markets could also be in the making, such that within days, Oats, Wheat and Corn could be heading for multi-decade highs that ultimately might signal new all time record highs across the board in grains, most probably before this decade is out, or certainly in the next decade.

And what are the implications of this? Soaring Grain markets are highly inflationary and thus are bullish for Gold and Silver and perhaps the most notable factor in the Metals run earlier this year was the absence of Grains as part of the overall make-up of a record breaking CRB or Commodity Research Bureau Index, that in the next run up that may have already started, could add enough additional impetus to send the index to new all time highs approaching 400, that would have to equate to something close to an $800 Gold price and $20 Silver, at least.

As we have re-counted here just days ago, China continues to grow at 10% plus, Shanghai and Dubai at 15% plus and most of the rest of the World is now averaging 5% plus... Only the US and some of the more industrial nations are growing at a slower pace and they are still growing significantly by historical standards. Since this has never ever happened before, along with the recent all time highs of $80 plus Oil, we are still seeing $60 per barrel Oil and now we are starting to see how these record high prices are beginning to permeate the economy not just in the US, but around the World and just as the China factor with its 1.3 Billion population suddenly dawned on Oil traders a couple of years ago and then India began to be factored in as well, prices subsequently soared... And so now, with all those hungry mouths to feed around the World, perhaps it is beginning the dawn on Grain traders that the Grains might be the next domino to rise and in just the same way Oil sneaked higher so stealthily at time, the Grains have begun to soar in recent days with Wheat managing two very stealthy Limit Up sessions, that has not happened in years if ever, especially in the fall...? So what is really going on behind the scenes? We simply don't know at this point, other than the numerous droughts in recent years could be compounding and even Global Warming could be to blame. It's been talked about for years, when will the big one come? Problem is when it comes, it usually happens in such a way that it can take most investors completely by surprise. There has been a lot of talk of late about Corn perhaps having the biggest bull move in history as a result of the burgeoning demand for ethanol is putting a strain on growing acreage to the point that they will not have enough corn to deliver.

It definitely looks like it has already started... And that's not all: We saw Sugar soar to multi-decade highs earlier this year and it could be gearing up for a repeat performance following a fairly steep pullback to test its 10 cent breakout level and now the other surprise is, right in the middle of a so called housing slump, Lumber soars off a new low and like stealthy Wheat, almost manages two limit up days in a row...

Could all these moves have anything to do with North Korea's Nuclear test? Time will tell, but one should remember that one of the most reliable indicators of an impending War or conflict is often reflected first in the Commodity Markets. Though it may have fallen on deaf ears, just a few days ago, North Korea was warned, you can have a future or Nuclear Weapons, but you cannot have both. That sounds like a lot like a line in the sand that could have severe consequences and the same it appears would apply to Iran and on top of that, the with us or against us interpretation is also at stake, because without a doubt, any move to sell weapons to terrorists, would carry dire consequences.

Not taking action sooner has ultimately resulted in paying a much higher price later, just as Gulf War 1's disastrous legacy has now left us.

Trade Well

From the Desk of Savant