Average mortgage rates have been at historical lows for quite some time now as the government has attempted to put a cap on treasury rates.  Unfortunately, they cannot cap the 10 year treasury rate forever and when the government runs out of ways to push interest rates lower, it is likely we are going to see a sling shot effect.  There is little doubt that we are going to see inflation rear its ugly head in the next few years.  The Federal Reserve Bank has been printing money at will and the value of the dollar is likely to decrease greatly.

With this bit of knowledge we must decipher what inflation will do to average mortgage rates.  Throughout the history of the United States, we have seen that inflation causes much higher mortgage rates.  If we look at the most recent inflationary period, the 1970s and early 1980s, we see that inflation was running rampant.  The price of commodities skyrocketed and the 10 year treasury rate reached 15% at the peak in 1982.  If you were alive, you remember daily mortgage rates around 17% during this time; very bad news for the future of mortgage rates in today’s economy.

No one knows if inflation will be nearly as bad as it was in the 1970s and 1980s but one thing is for certain – we have never seen this type of government debt in the history of our country.  The problem is that Ben Bernanke thinks he can print his way out of this recession.  Basic supply and demand shows that the more you have of a good or service, the less it is going to be worth.  If Bernanke continues to print billions of dollars to buy back mortgage backed securities and assist in other stimulus programs, the value of the dollar WILL fall.

If you feel that inflation is going to show itself in the next few years, make sure to put your money in inflation investments.  There are no better investments during inflationary periods than commodities.  If you do some research on how commodities traded during the last period of inflation, you will see tremedous gains.  Once again, we have no idea how bad inflation is going to be, but we are definitely going to see it in the near future.

The current secular bear market we are in and have been in since 2001 has many more years to go.  It is likely that investors will see great gains from some of the cyclical bulls that are going to occur within the secular bear market, but overall, it will be until at least 2014 or later until we are in a true secular BULL market.  Zeal LLC has some great articles on secular bear and secular bull markets and this weeks essay is extremely worth the read.  For anyone who hasn’t read Adam or Scott’s articles, I strongly suggest you take the time and read some of them.

This week Adam points out that the secular bear market that began in 2001 still has several years to go because most bull and bear markets run for an average of 17 years.  It takes this long for sentiment to completely change and for the financial markets to get their firm footing in one direction or another.  The good thing about being in a secular bull or bear market is the fact that there are always investments that make a great deal of money.  When stocks are in a bear market commodities are in a bull market.  We have seen this since 2001.  Some commodities have tripled in their eight year bull while most stocks have been flat or lost value.

Adam also does a great job of pointing out how history has a tendancy to repeat itself.  He relates the current secular bear market to that of the 1970s.  If any of you have memories of this, you know that stocks were flat the entire decade while commodities went to the moon.  Will this happen again?  It is very likely as not only are there bullish supply/demand factors in commodities, but there is also likely to be hyper inflation.

With Ben Bernanke doing everything he can to keep mortgage rates low, he has printed WAY too much money.  This means that the value of the dollar is going to decline and the price of commodities is sure to rise.  It will be very interesting to see when commodities start to see their parabolic rise, but I hope it does not happen soon.  When the parabolic rise starts, that is when we only have about one to two years left in the commodities bull.  I hope to have much more capital in commodities before we see this doubling or tripling of value within a year or two of the parabolic rise.

Overall, the secular bear market has many years to go.  If this bear is like most in the past, we will not see another stock market secular bull market until around 2018.  This is great news if you have been smart with your inflation investments and put your money into commodities such as Gold, Silver, Oil and Copper.  For more information on where to put your money make sure to access Zeal LLC.

Since 2005 I have been strongly invested in commodities.  My strong beliefs stem from the Jim Rogers teachings as well as the many articles at Zeal LLC.  Long valuation waves have proved to reign true over and over again.  If you are not sure what long valuation waves are, I strongly suggest you read the article and realize that we are only in the 9th year of the current wave that is likely only half way through.  That means that the commodity investments that have seen huge gains are only halfway through their bull run!

With that in mind I am very bullish on the ticker symbols DBA, DBB, DBC and DBP.  These are commodity etfs that track actual commodities rather than commodity companies.  As Jim Rogers has been saying since 1999, commodities will see bigger gains than commodity companies because there is no guarantee that the companies will be able to find and access the resources.  The less gold that is found, the higher the price.  If a company cannot find gold, they lose profits.  If you have money to invest and enjoy a good hobby, I suggest buying actual gold and silver coins on Ebay.  I have been doing it for about two years now and it is quite enjoyable to find a deal on a good looking coin.

If you think inflation is not coming you are truly fooling yourself.  If you want to put your money where fortunes will be made over the next decade, I would strongly suggest commodity investments.  Gold and Silver doubled in the last year of the last commodities bull market, can you imagine if you got in several years earlier than that?  This could be your chance!

In tourism news, there is a great article on Nantahala River Mountain Fly Fishing.  If you have ever been to this area of the country, you know how amazing it is, if you haven’t please make plans to see this “best kept secret of North Carolina.”