Investors should dump the dollar and put their money into commodities, says billionaire investor Jim Rogers. The greenback will get even weaker as inflation inevitably rises, which will prompt the government to sell bonds and print money to pay down gaping deficits, Rogers says. "The U.S. dollar is now a terribly flawed currency," the Australian Broadcasting Corporation quoted Rogers. "The U.S. as recently as 1987 was a creditor nation. Now it's the largest debtor nation in the history of the world and that's going to continue to cause problems." Investors should put their money in commodities, especially since demand for commodities like oil and gold will outstrip supply, thus boosting prices, Rogers says. Federal Reserve officials have said they will keep an eye on inflation when the time comes to yank stimulus money out of the economy once recovery gains steam. – Newsmax

Dominant Social Theme: Commodities … up?

Free-Market Analysis: Our favorite Harley-riding, free-market-oriented billionaire, Jim Rogers, is at it again. He just loves to talk about money metals as if they were just another commodity. Above, he's back to comparing gold to oil. This comparison does not, in our opinion, take into account the incredible amounts of oil available around the world (and oil substitutes like natural gas). Compare these vast quantities to, say, gold, the volume of which – extracted throughout history – some have estimated could fill a boxcar at best.

Not only that, but as we have pointed out plenty of times, gold and silver are MONEY and thus their prices are directly related to the confidence that people have in the fiat money they hold and the economic systems under which they operate. Gold and silver rise predictably as fiat economies collapse, and this is a much different dynamic, in our opinion (or should be) than the one that drives oil.

Rogers seems to believe that a dollar collapse will inflate the price of "commodities" across the board. We might just as well argue that a dollar collapse will have a negative economic impact and DECREASE the demand for energy, at least temporarily. We can make a number of cases for a bifurcation in the price of gold and oil. We would also like to mention that if the powers-that-be do manage to create a fleeting pseudo-recovery, they will merely extend the gold bull market well into the next years. We don't think the precious metals markets are anywhere near close to the top based simply on the amount of unwinding in major Western economies that has not yet taken place.