-->The on-going debate between deflation and inflation battles on, but
we're now seeing more evidence that inflation is winning that
fight... with commodities coming out on top.

Both the CRB Index of commodity prices and gold prices have trended
higher for more than a year. And since early October, bonds have
tanked, copper has risen and the dollar hasn't rallied as most had
hoped.

The white metal, silver, is also on the rise. It closed Friday at
$4.61, hitting its highest price this past week since September.

And gold continues to shine in light of monetary instability and
worldwide political uncertainty. The yellow metal closed $5 higher on
Friday -- running above $329 -- its highest point in five months.
Much of gold's gain came after the announcements of the resignations
of Treasury Secretary Paul O'Neill and Chief White House Economic
Advisor Lawrence Lindsey -- both forced out by the Bush
administration in an attempt to control political damage as a result
of the ailing economy.

"All the hype about a real recovery that has fueled the recent stock
market rally and underpinned an otherwise overvalued dollar is simply
not materializing," says Frank Giustra, chairman of Canadian merchant
banker Endeavour Financial."The dollar is and will continue to fall.
If gold breaks through $330 this go-round, we are off to the races."

Iraq -- A Trillion-Dollar Prize

>From the first caveman to swing a club to the modern man with his
finger on the button, wars have been and will be fought to control
natural resources. Nations build armies to conquer and defend
strategic resources, whether it is access to fresh water, plum
trading routes or unimpeded access to petroleum.

A respected oil executive in Calgary who asked me not to use his name
believes that Iraq's true oil reserves after future development will
total close to 300 billion barrels!

That is 40% more oil than Saudi Arabia and enough to fuel the entire
world for four years. If you price oil at $30 a barrel, Iraq's true
oil wealth is teetering close to $1 trillion. That means that
whoever controls Iraq controls the greatest cornucopia of oil that
the world has ever seen. In an age when America has severely run
down its oil fields and environmentalists are blocking the drilling
of potential new fields, Iraq's oil wealth has become a strategic
treasure that cannot be ignored.

The Golden Rule -- He Who Has the Gold Makes the Rules

President George W. Bush cannot afford to ignore this massive oil
wealth. Instead he sees what any great leader would see if they were
in his shoes: America is strategically vulnerable to oil
interruptions and a friendly government in Baghdad that would provide
political security to the Persian Gulf region and energy for the
United States for decades to come. That's why he's focusing on Iraq
and not on more troublesome"rogue states." After all, North Korea
has bigger weapons of mass destruction, and its leader Kim Jong-il is
a despot no better than Saddam Hussein is.

But North Korea does not have much oil, while Iraq may hold 300
billion barrels of it. If the mob was prosecuting the war, it could
be scripted like this:"Nothing personal Saddam, it's business...
strictly business." But presidents have to be more accountable than
mob bosses so Washington continues to spout subterfuge, talking of
weapons of mass destruction, Iraq's connections to al Qaeda and that
Hitler is Hussein when written in Arabic.

The fact is that George W. Bush's war track is running just as
planned. Soon the U.N. arms inspectors will throw up their hands and
announce that Iraq isn't showing everything. By then Washington will
have the logistical support it needs from reluctant allies like Qatar
and Turkey.

In theory it sounds like smooth sailing. But like my boxing coach
said to me, it's one thing to talk a good fight. It is quite another
thing to fight a good fight. And make no mistake; markets are
counting on a U.S. first-round knockdown. Anything other than that,
and the shorts in the oil markets will start sprinting for cover.

And this all translates into rising oil prices, soaring prices for
resource-rich North American oil companies, and skyrocketing profits
for natural resource investors.

John Myers