Bloomberg article

The story over at Bloomberg claims that the dollar will strengthen which will hurt gold.  While that may be true in the short run, it hasn't been true over the last few years.  It also points out that consumer prices rose only .1 percent last month.  Yet, commodities have been in a rally since last year.  Could I be wrong about something?

I decided to go back and take a look at the commodities index over a 5 year period.  It seems that a peak was reached in 2008 which coincided with the 150 a barrel oil price.  Then it slumped during the recession, as might be expected.  Since early last year, it has been steadily rising.  I think this is a reflection of the quantitative easing which is intended to reflate the economy.  Evidently, this is working.  On the other hand, this is exactly what was done in the early part of the 2001 recession.  This showed up many years later in the above mentioned spike in oil and commodites.  It also filtered into the consumer price index that year, according to my recollection.  So, the point being, that even though inflation isn't here yet, (according to the consumer price index) it will get here eventually.

The article also claimed that this will hurt gold, but it didn't do that during the last business cycle.

In the meantime, the Fed can pump prime the money machine.  This gives them the green light.  But does it solve any problems?  Not really.  As I mentioned before, it will only buy some time.  During that time, the policy makers had better get some problems fixed.