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It feels like the movie “Groundhog Day.” Yet again, Fed Chairman Ben Bernanke will convene in Jackson Hole, Wyoming, on Friday. Last time he did this, the economy was also showing signs of deterioration and as a result, he set the groundwork for a second dose of quantitative easing (QE2).
Might Ben do this again? Perhaps so. Already this week, we've seen a big rally in the stock market.
However, I still think the Fed action will be restrained. After all, just a couple weeks ago the Fed indicated that it will maintain interest rates at near zero for two years. What's more, there are growing disagreements among the board members.
So what might this mean for commodities? Well, taking a look at the long-term, I think the prospects look bright, especially for gold/silver and agricultural categories. Consider that inflation is already starting to perk-up (running at an annual rate of 3.6%).
Thus, it would still make sense to get exposure to the SPDR Gold Shares (NYSE:GLD) and Market Vectors Gold Miners ETF (NYSE:GDX). I also like the PowerShares Global Agriculture ETF (NYS: PAGG), which has stocks like Monsanto (NYSE: MON) and PotashCorp (NYS: POT).
Yet if the stimulus does not come from the Fed -- or it is meager -- then there could be some short-term pressures.
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