Is silver at “unrealistic” levels?

The picture is hardly different in many other commodities at this juncture. Record levels of net bullish positions have been spotted in cotton, copper, and, obviously, crude oil. Precisely amid such manifest euphoria for “stuff” there are some, such as Boston-based GMO’s Jeremy Grantham, who warn that the entire niche could experience a cave-in of epic proportions. Mr. Grantham places the odds of such a collapse as high as 80% (!). But, fear not; following such an “adjustment” the GMO contrarian envisions “the buying opportunity of a lifetime.” Mr. Grantham is a huge commodities bull, by the way. A study he published on Monday was titled “Time to Wake Up: Days of Abundant Resources and Falling Prices are Over.”

MarketWatch’s Brett Arends concedes that crystal-ball gazing is a dangerous and quite imprecise practice, but notes that Mr. Grantham’s bearish short-term clarion call has some valid foundations: “This isn’t purely subjective. Data from the futures market back it up. Speculators, as noted above, are now sitting on huge bullish commodity bets. That frequently precedes a serious correction. A fair number of these speculators are semi-pro hedge fund managers who are back in the game and gambling, once again, with borrowed money. They are frequently paid to take big gambles, and they will have to buy back positions, quickly, if markets turn.”

Platinum and palladium started off on the mixed side this morning, as the former gained $2 to advance to $1,806.00 per ounce and the latter remained unchanged at $752.00 on the bid-side. No change was reported in rhodium which was quoted at $2,230.00 at last check. Automaker Volkswagen AG reported record profits for the first quarter of this year, with special thanks to the sales success of its Audi and VW brands over in China. The firm is counting on continued growth in auto deliveries in the BRICs and hopes to claim the number one global spot in car production by 2018. Toyota Motor currently retains that title.

Since it is not possible for us to wait for the 2:15 PM hour and since there will be plenty of post-game Thursday morning analysis on offer, let us take a look at some previews of words and “body language” to possibly come from the Bernanke press conference today. Of the 44 economists that Bloomberg surveyed recently, 75% believe that the US central bank will show that it is nearing the time when it veers away from its hitherto highly accommodative monetary policy and start heading in the same direction as its EU, Chinese, and Indian counterparts; a direction that leads to higher rates, that is.

The first “baby step” on that trail will likely be the ending of the by-now-familiar “extended period” label that has been applied to interest rates at or near zero. Following that “omission” of the “extended” term, the Fed will likely take other steps, perhaps not of the baby variety, but in the same direction. For example, the portfolio of its assets might begin to be reduced. It is an open secret that the Fed has been “shopping” during recent month for counterparties who might play a role in such sales.

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