In his quarterly commentary, Bill Miller had some interesting thoughts about commodities.  Everyone is piling in, he says, assuming commodity prices will keep going up.  Despite the fact that every commodity right now trades significantly above both average and the marginal cost of production.  People always want to buy today what they should have bought 5 years ago:

    When I saw the front page headline in the Financial Times on April 10, I was momentarily disoriented.  "Commodity prices set to soar," it read.  My first thought was I read the date wrong, that it was April 1, and this was an April Fool's story.  But it was April 10, not April the first.

    Then I thought perhaps they had delivered me a copy of the FT from the spring of 1999, when commodities prices were all in the tank and oil sold for $10 a barrel.  Reminding the reader that you had predicted the great commodity bull market in 1999 when prices were down and everyone was bearish would be good marketing.  But the date was unmistakably 2006.  And then I recalled that the FT's sister publication, The Economist, had on its cover in the spring of 1999 the headline "Drowning in oil," saying that despite the price of crude having fallen in half in two years, "$10 might actually be too optimistic. We may be heading for $5."  What it did not say, as oil was making its lows, was that the price was set to soar, and that you could make six times your money in the next seven years.

    Is it any surprise now that oil is a six-bagger, that copper has quadrupled in the past four years, that silver has tripled in three years, as has sugar, that orange juice has doubled in the past two years, and that after the biggest commodity rally in 50 years, it is NOW that prices are "set to soar" and that pension funds are falling all over themselves to allocate a portion of their assets to commodities?

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(Found via Stingy Investor)