Continuous Commodity Index Reaches Another All Time High

Posted: Jan 12 2011     By: Dan Norcini      Post Edited: January 12, 2011 at 2:12 pm
Filed under: Trader Dan Norcini
Dear Friends,
The CCI, Continuous Commodity Index, which I use to track the commodity complex as a whole, today scored yet another all time record high. It should be noted that it moved to this new and higher level without any meaningful assistance from gold and silver which were fighting off selling for most of the session.
The big movers were the grains on the heels of a bullish USDA report, crude oil as it pushed past $92 and the livestock sector, with cattle futures moving to yet another all time record high.
With the commodity complex ratcheting upward, it is going to pose a real challenge for the perma bears at the Comex to keep the precious metals from moving higher.
Selling pressure in gold was tied somewhat to relief over the Portuguese bond sale which was not a total fiasco. That led to bond selling as the need for “safe havens” was somewhat diminished for the time being and brought relief buying back into the Euro. Normally one would expect the Dollar weakness to give gold a bit of a boost but this time around it was selling supposedly tied to the reduced need for gold as a safe haven.
Given the tenuous condition of Portugal and Spain, and others in the Euro zone, those that are dismissing a need for gold as a safe haven are very premature.
Incidentally, those of you who track the bond market will no doubt have noticed the intervention by the Fed as it continues to screw with the long end of the curve. Bonds recovered nearly a full point off their worst level even with the S&P making yet another yearly high and the CCI sharply higher as well. History is going to point its finger directly at the Bernanke-led Fed and their brazen efforts at distorting the interest rate markets as the prime culprits in making an already unstable debt situation even worse. The notion that bonds should be moving higher with inflationary pressures about to hit like a tsunami is laughable at best. What is Bernanke going to do when crude oil moves to $100 barrel – buy more bonds on the long end to further push it to $110 and higher?  Consumers paying $4.50 for gasoline should send their credit card bills to his FOMC for payment as they are responsible for this orgy of commodity buying. I keep warning on what is happening in the food sector – it is now too late to prevent that from hitting us all – what is coming next is energy.
The sum of $600 billion to throw at the bond market is no small matter but at some point down the road, that market is going to react with a vengeance. When it does, it will be much like a rubber band that was stretched further and further only to snap back with stinging sharpness. I continue to watch this tragedy unfolding in stunned disbelief. Are these damned fools oblivious to what they are doing to the middle class in this nation?
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