Inflation comes from many sources. One of the important inflationary forces in recent times has been the rise in commodity prices to speculative highs. This has been driven by a cheap US dollar that has created a speculative bubble in some commodities. Silver was one of the largest bubbles, but it also developed in gold and copper. It is the speculation in industrial metals that has helped to increase inflation, so any retreat in the commodity markets is welcome news.

Chart analysis provides information about the potential for this commodity retreat to continue, or to decide if it is temporary. The situation is a mixture of mechanical system changes that have developed some end-of-trend price behaviors.

The Chicago Mercantile Exchange (COMEX) is the home for silver trading and last week it increased margins for futures trading several times. This was not unexpected. In previous columns we noted that American Federal Reserve Chairman Ben Bernanke hinted at similar moves in his comments about clearing and settlement issues. This type of regulatory change, or the threat of regulatory change, changes the conditions for trading in the market. It makes it more difficult to execute some trading strategies.