Montreal, Canada

For the first time since mid-2008, a host of commodities are either approaching a supply deficit situation or are heading even deeper into deficit. More than any other variable, a net supply deficit for a commodity will drive prices through the roof.

When a commodity becomes scarce, that’s usually the prime ingredient for a powerful bull market. And that’s exactly what’s happening this year for a host of raw materials as supplies grow tight amid shrinking inventories or production bottlenecks in the largest producing markets.

Montreal, Canada

As a rule, closed-end fund investors should never pay a premium above net asset value. Your margin of safety always lies in purchasing a closed-end fund below its net asset value and, over time, benefiting from the narrowing of the discount.

As gold and silver continue to hit new highs this month (silver at a 30-year high), some investors are chasing a closed-end fund trading at a 7.8% premium above its net asset value (NAV).

Montreal, Canada

This is truly an historical moment for gold and silver bulls.

For the first time since 2008, silver prices this morning show an opening bid of $20.81 an ounce, finally surpassing the closing 30-year high of $20.78 in March 2008. This price action vindicates any doubts about a false gold rally as “birds of a feather flock together. “ In this case, gold and silver have now confirmed this bull market is real and legitimate.

Montreal, Canada

The new Basel III capital adequacy rules provide a framework for boosting capital ratios in order to minimize another financial crisis. The verdict among the world’s largest banking centers, however, is that Sunday’s agreement didn’t go far enough to cushion recovering bank balance sheets.

Basel III won’t deflect another financial panic. It might boost liquidity to cover a potential run on deposits; but no regulatory agency or body can render a financial crash unavoidable.

Montreal, Canada

Gold-bugs are celebrating this morning as the King of hard money continues to hit new all-time highs in 2010 amid a flurry of buying from all corners of the market – including central banks and investors. The Indian wedding season is now approaching in earnest as demand for gold rises across the world’s second most populous nation.

Silver should be closely monitored at this juncture as it approaches an important resistance level.

Montreal, Canada

I’m convinced the United States will be forced to print its way out of economic misery. This process has already begun since 2008 in an exercise called “Quantitative Easing” whereby the Fed buys or monetizes U.S. fixed-income securities to help keep interest rates low.

The endgame will be the worst inflation since the 1970s, possibly even hyper-inflation, which nearly destroyed the German economy in 1924.

Montreal, Canada

Leave it to big government to regulate and, sometimes, over-regulate financial markets. The net result implies more trading curbs for commodity exchange-traded-funds (ETFs) as regulators aim to reduce speculators in the commodity pits.

Montreal, Canada

Some big names in the hedge fund business are currently long and strong the home-builders. Master trader, John Paulson, whose hedge funds circumvented betting against mortgage-backed securities with Goldman Sachs four years ago, is now long the home-building stocks. The man who helped bring down housing now likes the sector. Can you believe this guy?

I’ve got some respect for Paulson because he’s a gold bull. Yeah, he’s got a few more bucks than I do, but in all fairness, I was bullish on gold long before he was. The same goes for Soros.

Montreal, Canada

Stay defensive and don’t let the tremendous month-to-month volatility in asset markets dissuade you from the big picture. That’s my message to investors in 2010. I’m still forecasting a massive stock market decline from now until late 2011; for most investors, avoiding the market altogether makes the best sense, unless you can successfully hedge your portfolio in the upcoming storm.

-Dugald Malcolm, Montreal, Canada.