Montreal, Canada

I’m sure some investors are relieved to see most commodities opening higher on Monday after the worst weekly performance for the sector since Lehman’s failure in September 2008. Silver and oil were especially trashed last week. The benchmark CRB Index fell more than 10% from Monday through Friday.

Some commodities, however, might have already topped out. Sugar prices have crashed more than 20% recently and cotton has also tanked. Also, copper looks weak and has been consolidating for weeks, suggesting the global economy might be entering a soft patch.

The summer, however, is usually a bad time to be heavily invested in commodities.

With the exception of 2009 – following the lows achieved in March of that year – commodities have suffered a broader correction every spring or summer since 2000. With the Fed’s QE II drawing to a close (at least for now) later in June, some measure of sanity might return to risk assets as liquidity is withdrawn from financial markets. I very much doubt last week’s mini-crash marked the end of this decline; it’s only beginning.

Yet if summer is a bad time to own commodities, then it’s equally a good time to buy them as the season concludes and enters seasonal strength around September-October. I’m targeting the entire agriculture space, the oil drillers and gold and silver miners later this spring or summer following deeper corrections.

Make no mistake about it: the secular bull market in raw materials has a long way to go before it concludes. This includes agricultural commodities, the energy complex (including coal) and the precious metals. Inversely, the bear market in paper money isn’t over. Governments, especially the United States, continue to harbor the wrong policies that encourage weak currencies and asset class speculation.

The Fed and other central banks will continue to keep the cost of funds relatively and historically cheap and for the most part, will remain behind the growing inflation curve. Indeed, most central banks, including those in Asia, continue to harbor negative inflation-adjusted interest rates. And that’s the primary tonic supporting commodities. Paper money barely yields anything and increasingly, is dwarfed by rising deficits. Only Germany, Spain and Ireland have legislated serious cuts in state spending; everyone else is still sporting bulging deficits.