Industrial metals like copper, aluminum and iron ore are basic to economic development. China, with its explosive growth needs these metals.

Word of this has spread around the world, bringing speculators into the markets. China is the world's biggest consumer of aluminum and copper. Armed with that knowledge, speculators drove the price of copper up 48% in the second half of 2009.

Newmont Mining (NEM), which I first wrote about here on June 3, 2009, at a price of $46.42, still looks like it has the right stuff for future gains.

And that right stuff is: gold and copper. Newmont just posted Q4 EPS of $1.13, well above the First Call Q4 EPS estimate of 79 cents, on higher production volumes and better prices.

Sugar is one of the most basic commodities. Countries throughout the world are wanting sugar. Supplies of sugar are reaching a 20-year low this year. The shortage may become especially acute in the third quarter.

Here some supply/demand statistics:

• India the biggest importer may need an extra 2.5 to 3 million tons to meet a 7 million ton deficit.
• China, the biggest consumer after India may have a deficit of 3.3 million tons.

Several factors converging on the metals markets are causing a sell off.

First, China has taken steps to curb bank lending. Much of the Chinese stimulus money has gone into the purchase of raw materials. Now, with things cooling down, traders are less willing to stockpile base metals.

Second, U.S. payrolls fell by 20,000 last month, indicating sluggishness in the U.S. economy.

There was a sharp sell off in gold today, down $43.20 per ounce (each $1 equals $100). to $1,068.8 (12:30 EDT)

There were several reason cited for the drop. Among them were concerns about euro zone debt and weaker than expected US jobless figures.

Gold selling intensified and spread to other commodities on worries of sovereign debt default in Greece, Spain and Portugal.

Is the world running on stimulus money or is there real demand for basic commodities?

What has been happening is that underdeveloped countries have been using stimulus money to stockpile raw commodities. Now there is a surplus. This, in turn, has led to a fall-off in commodity prices.

Why are corn futures down so much? It seems that two factors converged to drive the price down by 49 cents to $3.76 per bushel this week: The first is supply and the second is reduced shipment.

On the supply side, the Department of Agriculture issued its report of crop production on January 12. The nation's harvest was estimated to be 13.151 billion bushels, up 8.8% from a year ago. And that's not all, global supplies will add to the pricing pressure as global supplies of corn, wheat, rice and soybeans are expected to be up 8.3%, to the highest level since 2002.

Prices could drop even further after the Brazil and Argentina harvests, due to start next month.

Oil prices traded lower Wednesday following an inventory report from the Department of Energy that showed a larger than expected increase in oil reserves last week.

Analysts had been expecting oil supplies to increase by roughly 1.9 million barrels, but were surprised to see the actual increase a much higher at 3.7 million barrels.

Following the unexpected rise in inventories, oil moved lower on the day and closed a bit under the psychological $80 barrier at $79.60. On Thursday oil prices crawled up to near $80 a barrel.

Chinese buying drove copper prices to a 16-month high. Three-month copper traded at $7,618 per metric ton, up $133.

Here's an interesting dynamic. Copper prices in Shanghai were higher than those on the LME. This allows traders to import copper at a profit. This helps to explain why there was such strong buying on the LME.

Copper was able to ignore the settlement of a strike at a Chilean copper mine.

This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation's leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.

"Whenever inflation heats up, there's no better place to park your cash than in tangible commodities," says Nathan Slaughter.

In his The ETF Authority, he noes "Our favorite play on this sector is Market Vectors Hard Asset Producers (HAP), an ETF whose 300-stock portfolio provides one-stop shopping for six distinct commodity sub-sectors."

From the U.S. to Europe, to Asia, cold weather is wreaking havoc on travel and agriculture. The recent cold snap is is driving the price of oil and agricultural commodities to new highs for the year.

Demand for crude oil is up, pushing prices to a 15-month high. On the New York Mercantile Exchange, oil traded at $81.77 per barrel. Natural gas demand has climbed sharply in China, with prices up as much as 40% in some areas.

We are back riding the bull today in commodities. The dollar is down with the March futures contract trading at 77.89, down 0.33.

Crude oil is trading at a high of $81.16 per barrel in the February West Texas contract, up $1.64. Brent crude is up $1.70 to $77.63 per barrel.

The metals are higher with LME (London Metals Exchange) copper up 1.3% to $7,525 per ton, triggered by a strike at a copper mine in northern Chile.

"To beef up our already strong collection of natural resource plays, we're adding Australia's BHP Billiton (BHP) to the mix," says long-term growth stock expert Stephen Leeb.

In The Complete Investor, he explains, "This $175 billion company is the largest mining company in the world and makes up some 14% of Australia's market index. It's truly the big fish in resource-rich Australia's ocean-sized pond."

"With more than 100 operations in 25 different countries, BHP produces a huge array of commodities and has a geographically diverse footprint to boot.

Ever since governments around the world started printing stimulus money, Jim Rogers, chairman of Jim Rogers Holding, has been bullish on commodities.

Rogers holds gold and would buy more. "I wouldn't think of selling," he said. "If gold goes to $1,000 per ounce or pick a number -- I hope that I'm smart enough to buy more."

Central bankers are buying gold, making gold an investment of choice among bankers around the world. Rogers does not believe that we've seen a bubble in gold. He believes that gold will appreciate over the next decade.

Gold has been on a tear, rallying to above $1,200 per ounce. Is gold vulnerable at these levels?

Commodity markets a quite unpredictable. Last week spot gold soared to a new high of $1,226.30 per ounce. The US dollar hit new three month lows. It seemed that all was well in wonderland.