Montreal, Canada

The CRB Index opens at a two-year high this morning as investors lunge after hard assets in an accelerated environment of dollar weakness and super low interest rates in the industrialized economies. The CRB Index remains more than 34% below its all-time high recorded in July 2008.

Still, the price action has been incredibly bullish over the past three months, triggered in great part by the Federal Reserve’s announcement to spend another $600 billion dollars on government securities from now until June 2011. Investors, anticipating another round of dollar weakness, have scrambled into commodities recently, exacerbating supply deficits across several raw materials, including tin, cotton, sugar and coffee.

The CRB Index, which tracks 22 raw materials, has rallied in 18 out of the last 22 sessions, marking one of the longest winning streaks since 2008.

Heading into November 10 here’s the commodity scoreboard, courtesy of Bloomberg:

Cotton +89.7%
Palladium +69.8%
Silver 59.2%
Sugar +57.3%
Coffee +52.9%
Corn +31.2%
Soybeans +30.1%
Soybean Meal +28.0%
Gold +26.9%
Soybean Oil +26.4%
Oats +21.0%
Platinum +20.2%
Wheat +19.7%
Copper +17.6%
Orange Juice +15.8%
Pork Bellies +13.6%
Feeder Cattle +11.7%
Live Cattle +8.3%
Lumber +8.3%
Rough Rice +7.5%
Heating Oil +5.4%
Crude Oil +2.1%

Of all the commodities tracked by the CRB Index, I find it most useful to closely follow the performance of copper and lumber. Both commodities are highly sensitive to the cyclical nature of an economic recovery and if both are rallying simultaneously, one could ascertain that inflation and higher interest rates might be upon us. Indeed, Treasury bonds have been falling hard lately, with 30-year bond prices down sharply over the past month.

Since bottoming in late June, spot lumber prices have gained more than 47%. Copper, also referred to as “Dr. Copper” in global investment circles, has soared more than 48% since June.

If copper and lumber continue to muster gains and bond prices continue to decline, then it’s a fair bet that the Fed and Bubble Ben will get their inflation death-wish. It’s painfully clear to hard-money advocates at this point that the U.S. central bank wants to give away money and if that’s not apparent, will create more of the stuff to grow inflation.