Looking at the trend, I nearly posted last week on the FM blog that I thought gold would reach $1020 by the end of the year.

Since then gold was risen from $895 to $945.

I nearly put money on it, but I think I already missed the gold party (I should have gone for it when at $675 last year), but am too concerned with volatility and would rather aim at cheap equities.

Anyone else think gold will go above $1000 this year? A dead cert?

I know this post is a little old (a few months is long time in the markets!) but it is an interesting time to be in commodities.

It would take a brave man, however, to call the top of the market but it looks like Deutsche Bank have taken the plunge calling the top of the commodity cycle and advising clients to take profits before the economic downturn casts its spell on the sector.

"The bank warned that oil will slide back towards its "marginal production cost" of $60 to $80 a barrel; gold will slump to $650 an ounce as the dollar recovers against the euro; copper, lead and tin will slowly halve in price; grains will calm down as harvests in Australia and the Eurasian Steppe return to normal."

Time to short me thinks

Indeed, looks like equities are beginning a recovery, and commodities are suffering from it. As an equities man, I have to admit I prefer it this way.

Me too Brian, however, I do have worries on the markets still that could bear fruit for commodities.

The recent buy backs of ARS by Citi and UBS (proposed buy back) has taken an off balance sheet item that was supposed to never impact the banks balance sheets and made it on-balance sheet.

This was caused by certain US States threatening to withdraw bank licenses and we saw the banks fold like a newbie poker player. Saying these ARS's were 'inappropriately sold' is a scary thought. What about CDO's? We have already seen two Bear Stearn guys in had cuffs, if the regulators or, more likley, politicians decide that other instruments were sold in the same manner, are we likley to get more issues?

I wouldn't bet against it.

Indeed, but I think we're seeing fall out from the whole credit crunch impact - so it's effects, rather than additional causes being played out.

I posted on the FM blog on July 15th that I thought we'd seen the trough from the credit crunch and that financial stocks had now reached their lowest point. I was absolutely right, but there is still plenty of gain in financials in my opinion.

Citigroup, Merrily Lynch, and Lehman Brothers are still reasonably flat compared to the recovery of other US financials - ie, Bank of America and Wachovia, bond insurers and mortgage guarantee companies - so I think US investment banks still have a lot of investment growth.

Also remember all these so-called losses are only paper losses so long as not sold, but need reporting for accounting purposes. Once credit markets finally build up momentum over the next few years, these write downs will be written back up again.

For example, my SIPP made a 33% loss in July - but it was a paper loss and would only have been incurred if I were selling. I never planned to sell within 5 years, and even after a month, the loss is only around 3%.

I think while investment banks remain battered, they represent a ripe opportunity for investing for a long-term hold.

I also think the whole risk element has been seriously overplayed - I limited my investment of bond insurers and mortgage backers because other people saw risks and persuaded me against too much in this area, despite the fact that as a financial commentator I felt this was a risk easily over-stated. Now I rue being influenced because the bond insurers and mortgage backers are all climbing - anywhere between 50% and 400% growth since July 15th. Still cheap, though, if looking to buy and hold for the long term.

I see gold weakening back to $700/oz support before rising again. there is still another big cycle at hand. The action will shift to developing countries. This is just a cooling off period. Give it 2-3 years, then another 10-15 year rally.