Article originally submitted to subscribers on 12th November 2006...

So the Dems took the Senate and the House.

It's always a credit to the US that so much power can be transferred in such a peaceful manner.
Well done America!

But I'm asking myself, what's really changed?

I think its great that President Bush may be reigned in a bit. A counter balance is normally a healthy thing, preventing extremes.

But look here, the Dems might begin to administer the right medicine at the exactly the WRONG time.
Higher taxes, reducing deficits and a reduction in overseas military operations. All these measures serve to reduce America's ability to do what it does best - SPEND. And its America's spending that's keeping the Global economy afloat.

Ok, what else is news?

I see Washington State is experiencing its worst Floods in 10 Years.
I hear parts of New South Wales in Australia are going through their worst drought in 1,000 years. Yip, you read that right, one thousand years. How they figure that out I'll never know.

Anyhow, to the thinking individual it should be obvious that the Worlds weather has gone crazy! Global Warming it seems is no longer a worry for the future but upon us NOW.
On the back of weather related news I notice agriculture prices have now come alive. Corn, Wheat, Oats are all surging.

Chart 1 - Agriculture (top) leading commodities higher; Gold (bottom) will move higher on inflation concerns

Nothing increases Inflation Expectations quicker than rising Food prices. The Reserve Bank of Australia obviously realizes this and recently raised interest rates to keep expectations in 'check'.

It's actually laughable that Central Banks whose sole purpose is to create money (the very essence of the definition of inflation) market themselves as inflation-fighters-in-chief.

The fact is Central banks the world over are now being pressured to raise rates. This comes at a time when debt levels are so high that higher rates pose a SERIOUS RISK OF CAUSING A FINANCIAL CATASTROPHE.

I bet the thinking at the Fed is:
- Don't rock the Debt Laden (Housing) boat with anymore interest rates rises.
- Let inflation have its Day and hopefully moderate naturally due to brutal price competition out of China and India.
- Pray the Dollar devaluation continues in an orderly manner.

It's a very tricky balancing act and as long as the world faces these massive financial and natural imbalances the major investment themes within your portfolio should be Gold for Dollar devaluation and Uranium for Global Warming.

Oh well, enough doom and gloom for now. It's a glorious day on Bondi Beach in Sydney. Surfs up and it's No Worries Mate! Just keep an eye on that Dollar index. With the Chinese openly announcing a shift away from Dollar reserves, a move under 85.00 would be the first sign of trouble.

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