US Dollarhas been depreciating against other major currencies particularly since QE2, which in turn has buoyed commodity prices across the board. Now that QE2 is ending and with very little prospect of QE3, anyone investing in commodities must take a position as to the future direction of the US dollar.
I'm of the view that the devaluation of the US dollar was an 'intended' consequence of the very accommodating monetary policy by the FED, very much contrary to the public statements of strong dollar policy espoused by the US Treasury and the White House. If not for the weak dollar and the resulting increase in relative competitiveness of the US economy, the US would have gone down the toilet by now. Most importantly, the weak dollar is also a very effective method of devaluing their unsustainable debt.
I think the weak dollar policy is here to stay for a while given persistent high unemployment, tepid recovery and the huge debt in the US. I honestly did not think that this would be the case even 3 months ago. So for commodities, I'm of the view that even with moderation in demand, historically high commodity prices are here to stay for awhile. So companies like Cline with it's main asset in the US will have a comparative advantage, realizing higher prices while costs will be tempered.
Of course, all of this will be tossed out the window if unexpected events like Greece defaulting in an untimely manner were to come to pass. For us Cline shareholders, we just need to make it to the end of 2011. Very interesting times ahead indeed. GLTA we'll need it.