“QE2” pushing up commodities and it’s not even started yet

I keep hearing noise coming from the US about quantitative easing part 2, they are calling it “QE2” over there! It’s not started yet but is already starting to push up commodity prices. I bought some silver in an ETF a few months ago, look at the chart…

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The question is how high will it go? Is it worth buying more? I have no idea, I suspect there is more to be had and we are just seeing the beginning of a huge surge in commodity prices. More QE means a devalued dollar, a devalued dollar means people won’t want to hold large quantities of dollars and will stock up on gold and silver etc. thus increased demand and finite supply results in higher prices. The thing that I can’t get my head around is that commodities are typically priced in dollars, so if the dollar is weakening is this adding to the upward pressure (i.e. commodities cost more simply because the dollar isn’t worth as much), causing an even more rapid surge in prices when coupled with increased demand?

So if QE hasn’t even started yet and prices are already rising, maybe it’s time to load up before things get silly! 🙂

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