Over the foreseeable future oil will be the most important variable to determine how the market performs. I won't diminish the role of the election—it could prove very important, but only to the extent that the winner influences the economy and economic prospects; right now the most important prospects concern the performance of commodities. More specifically, for stocks to remain on an upward track, commodities, as they have in 2016, must also remain up-trended. What the world needs most is a gradual but determined upward path in commodities. A major commodity break-out would force much higher interest rates, a likely sharp rise in the dollar and economic pressure on America and other developed economies. A fall in commodities, on the other hand, would be a threat to worldwide growth as it would signal the world’s growth engine is faltering.

What makes commodities so important? Growth. Though the final figures are not in 2016 was likely a unique year—probably the first in recent history in which a non-recessionary world saw developing economies contribute more to world growth than developed economies. Moreover, according to the most recent IMF report, in 2017 the developing world should contribute 9 percent more to world growth than the developed world.

One of the most reliable signs of growth in the developing world is the path of commodities. And in 2016, despite many zigs and zags across many different commodities, the path was decidedly upward. As you can see from our chart, one day before the election two industrial commodities indexes (which exclude oil) and oil reached nearly the same gain.

Oil, as the most important commodity, is especially important and as oil goes, so again, with leads and lags, goes the commodity patch overall. The chart shows this. Since the beginning of the year oil has followed a very volatile trajectory, but on this election eve this most important economic driver is up about 20 percent for the year, which more or less matches broad-based indexes of commodities that do not include oil.

That’s hardly surprising. The production and consumption of commodities tend to a large extent to be interrelated. Renewable energies will likely play a role in this relationship between oil and other commodities. But it should be emphasized that while efficiency in mileage and other oil uses has somewhat lessened the relationship between growth and oil use—that is much more apparent in the developed world than in the developing world. Why? Because so many commodities are becoming increasingly scarce. This means that in order to produce a unit of virtually any commodity you must drill deeper, process much more ore, which means more grinding and higher transportation expenses. While there have been some productivity gains in processing lower grade ore, there are limits and overall oil use in mining is leveraged to growing scarcities.

This is a major reason China continues to accumulate massive amounts of oil as well as other commodities. As the world moves forward the resource cost of ever greater use of commodities, meaning ever greater growth of the developing world, will mean higher commodities prices globally. Not too long ago, in the 80s and most of the 90s, one of the surest signals of strong economic growth and a peppy stock market was a commodity price decline. Indeed, before, this century began, if commodities fell 20 percent year-over-year you could almost shut your eyes and buy any stock that came to mind. My goodness how things have changed. Today if you see commodity prices fall sharply you should probably grab all the gold you can carry and hide out until the dust clears. Why? Because a sharp fall in commodities would indicate that the major driver of world growth has gone into reverse and under those kinds of deflationary conditions, the yellow metal has an unmatched record of maintaining purchasing power.

In 2016, despite the downturn in worldwide trade, China exported a trillion dollars to the Silk Road, which along with China almost defines the developing world. Thus, another number to watch with an eagle’s eye are China’s trade statistics with the Silk Road.

We have talked before about China’s aim to control the trading of physical commodities. I continue to believe the table has been set for China to begin oil trading, which will set the stage for a new oil benchmark—and very likely a benchmark that will mark an acceleration of a world in which the dollar is no longer king of the hill. That would give gold a much larger role. Indeed, as I look ahead, the majority of possible scenarios indicate a world in which gold shines and perhaps shines gloriously.

If commodity prices get crushed or just languish, gold will shine as it will indicate languishing world growth, forcing ever greater monetary accommodation, or a falling into a deep hole. If commodities soar gold will shine since, despite higher interest rates, they will not rise enough to impoverish the middle classes where commodities remain essential items and eat up a large chunk of disposable income. Moreover, there will be a pressing need to find a currency that can be exchanged for ever scarcer commodities. Paper money won’t cut it; gold will.

The dreamer in me still hopes for a world with productivity growth suddenly bursting forth on all fronts. Wages and GDP would grow together without generating inflationary pressures. While I see no signs of that so far, without dreams all would be pretty dull. Our portfolio remains chock full of commodity leveraged plays and many others that will benefit from growth in the developing world. But whichever stocks you choose, do make sure that selection has some gold in it.