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Devaluation of Currency
January 3, 2011

Is investor demand for hard assets and wealth protection growing?

Currency Devaluation

''Commodities head into 2011 with a second year of asset-beating gains that elevated oil and grains to their highest prices since the financial crisis and copper to a record.  And analysts say it is not over yet.

The commodities sector as a whole rose 17% in 2010 to extend last year's 23% growth, as measured by the Reuters-Jefferies CRB index.  That outpaced the 13% rise in the S&P 500 stock index and the 5% return in U.S. bonds.

Palladium led the gainers, while only two of the 19 commodities in the CRB declined this year.  Natural gas was the outlier of those losers, falling 21%.

Double-digit gains were the norm, as investors took their infatuation with precious metals as a hedge against uncertainty to new heights in the silver market, driving prices up 82%, while coffee and cotton nearly doubled as investors sought out niche markets that had missed out on past rallies.

Friday's fall in the dollar helped end the year on a high note for a range of commodities, with the last-minute rush pushing copper to another record, silver to a fresh 30-year peak, and oil, corn and soy to their highest since mid-2008.

But the accelerating gains of the past few weeks are notable for having broken a long-intact correlation with the dollar. Instead of falling as the dollar rebounded in November and December, commodities have scaled new highs.

For many, that suggests that the basics of supply and demand are taking over from financial flows, paving the way toward higher highs next year -- regardless of the dollar, which is expected to hold its own, a Reuters poll showed.''

''Palladium was the star of precious metals and the commodities complex, rising 96% to above $803 an ounce.''

''Gold rose 30%, its strongest performance since 2007, driven by concerns over global economic recovery, and a weakening of the dollar during the third quarter.

Silver rose 84% to end above $30 an ounce for its largest gain in at least 30 years.''

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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