Unsustainable deficits, quantitative easing, lack of faith and a near zero Fed Funds rate have conspired to punish the Dollar in recent months. Commodity prices have risen nearly as much as the Dollar as fallen since most are Dollar-denominated and require increased pricing to preserve purchasing power (as opposed to reflecting supply/demand considerations).

Speculators borrowing heavily these cheap Dollars and leveraging the trade by purchasing commodities will continue to make their quick buck. Kudos to them if they’re rewarded for their risk.

Eventually the Dollar will halt its decline. When it reverses trend commodity prices will plummet barring any supply/demand considerations. The foolish will nonetheless chase the trade long after it’s been milked dry. When will they learn?