The astonishing rally of commodity prices during the past 12 months has taken most analysts, economists and investors by surprise. Rather than a dramatic change in the relationship between supply and demand for the underlying commodity, surging commodity prices have been driven by the devaluation of the preeminent marker of international commodity values -- the U.S. dollar. In the months ahead, the dollar's devaluation will increasingly register against other major currencies. Rapidly deteriorating U.S. economic fundamentals, questionable policy at the Federal Reserve, increasing political instability and extreme global geopolitical instability may trigger significant foreign capital flight from the United States.
Brief History of Commodity Prices