Not all investors are so optimistic.

"The whole cycle that began around the turn of this century ended,'' said Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc. in New York, who returned 15 percent a year in the 1990s managing commodity investments. ``Human ingenuity creates productivity, and the real price of almost everything that's extracted or manufactured goes down over time. That's the nature of human progress.''

Federal Reserve Chairman Bernanke signaled last week that the central bank expects the commodity rally to ease. The Fed is keeping its target for interest rates ``relatively low'' because of ``our expectation that the prices of oil and other commodities would ultimately stabilize, in part as a result of slowing global growth,'' Bernanke said Aug. 22 at the Kansas City Fed annual conference in Jackson Hole, Wyoming.

``We've seen the end to the upward trend'' for commodities, Nicholas Sargen, chief investment officer of Fort Washington Investment Advisors Inc. in Cincinnati, said in a Bloomberg Radio interview Aug. 22. ``The global economy is weakening, not just the U.S. economy. All the evidence coming out of Europe is that the economy now is stagnating. Japan and parts of Asia are weakening as well. That's just too powerful to be overcome.''

Countries that make up half the world's economy face a recession, Goldman Sachs Group Inc. said Aug. 21. The U.S., Japan, the 15-nation euro area and the U.K. are ``either in recession or face significant recession risks in the months ahead,'' Goldman's London-based international economist Binit Patel said in a report. A year since the U.S. housing slump sparked about $500 billion in credit market losses for banks globally, the world's largest economies are now stumbling as rising borrowing costs combine with high commodity prices."

From the big picture, we turn to the daily action. Storm-watch is on top of the agenda. Whether tropical, financial, or geopolitical, storms are the drivers of the late days of August. It's just a question of where they hit and how much or little damage they inflict.

Jon Nadler is Senior Analyst, Kitco Bullion Dealers Montreal

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