“The investment implications are clear to us. With the coming “taper,” long-term rates will float upwards and eventually surpass nominal GDP annual growth rates. Commodities will continue to lead the way. Critical among them are coal, oil, and natural gas; their explosive path, driven by already favourable fundamentals, is being magnified by the consequences of ill-thought-out moves to transition to greener energy. Base metals, cotton, sugar, coffee, each for their own particular reason, will soon be making multi-year highs (cotton already has). It’s only a matter of time before precious metals join the parade. Because inflation does not follow a straight line and is quite lumpy, an index best captures the bull market. That’s what we have done to date. Still, we have also allowed ourselves to be selective, at least with respect to the most liquid and important commodities.”

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