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STOP PRESS:

News

March 05, 2008

Get Ready For More Records To Tumble

By Rob Davies


The news last week that the California Public Employees Retirement System is to put more money into commodities is one of those items that give you an uncomfortable feeling. Why has America’s largest pension fund decided that now is the best time to invest in commodities? Is oil at US$103 a barrel a better bet than ten years ago when it was US$10? Will buying gold at almost US$1,000 an ounce turn out to be a better decision than when central banks sold it at US$250 an ounce at the turn of millennium?

It’s perhaps too easy to read too much into these news items. Nevertheless they are probably a good indication of people’s views on the asset class. That inflation is beginning to spook the great and good of the American governing classes is clear from the utterances of Ben Bernanke, the Chairman of the US Federal Reserve. His policy of drastically cutting interest rates has so far only reduced the value of one commodity: the US dollar. It traded as low as US$1.52 to the euro last week, meaning...

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