AT NEW YORK'S

, you'll pay around $700 a night for a room with a city view. And while dining at the exclusive

, the chef's "degustation" menu will set you back a cool $105 drinks and caviar (at a mere $75 an ounce) not included.

Although there are plenty of lesser-priced options, the truth is that you tend to get what you pay for. So while you could save money by opting for a meal at McDonald's and a bed at the Red Roof Inn, the experience just wouldn't be the same. In a free economy, the hottest spots command the highest prices.

In the markets these days, the hottest seat in town isn't for stocks or options, but for commodities, several of which continue a historically significant, yet strangely underdiscussed, bull market. As regular Tradecraft readers know, we've been espousing the virtues of hard assets for years now. Just a few weeks back, we made the case that commodities were still cheap relative to stocks using ratio analysis. Now, by examining recent trends in exchange membership prices, we can observe more evidence that hard assets like energy and metals continue to be where the action is in today's markets.

A quick review: An exchange membership or "seat" represents the right to trade on the floor of a particular exchange, either for oneself or on behalf of customers. Generally speaking, members pay lower commissions, have more favorable margin requirements and are better positioned to benefit from higher trading activity. And while seat prices are influenced by a number of factors, nothing seems to have a bigger impact than the price action of the particular commodity or security to which the membership is most intimately tied.

For example, consider the price of a seat at the NYSE. When plotted against the NYSE Composite Index, one quickly sees an almost perfect correlation. A bull market in stocks, it appears, is accompanied by a bull market in seat prices as well. So it's worth noting that NYSE seats, while still pricey at $1.85 million, are still down 30% from their all time high of $2.65 million reached during the heyday of the late 1990s. Although no indicator is airtight, at this point, NYSE seat prices are not yet confirming the notion that a new bull market in U.S. stocks has begun.

Annual NYSE Seat Sale Midpoints and NY Composite

At many commodity exchanges, it's a different story altogether. Simply put, seats prices are booming. At New York's COMEX, where precious metals such as gold, silver and platinum trade, seat prices have quadrupled in the past two years, recently eclipsing a 19-year high set in February 1984. Because COMEX seat prices are so closely correlated with gold, this new high suggests that recent strength in gold is more than a temporary affair. A 19-year peak for gold would put the yellow metal north of $500 an ounce (from today's $380).

COMEX Seats and Gold Prices

A similar story can be found in the energy markets, where a seat at the New York Mercantile Exchange recently set a new all-time high of $1,625,000. The NYMEX, whose crude-oil and natural-gas contracts are considered the world's benchmark, now boasts the most expensive commodity-exchange membership in the country. And because NYMEX seat prices are also closely correlated with energy prices, one can infer that the recent breakout in seat prices is a harbinger of more expensive oil and gas in the months ahead.

Relative Growth: NYMEX Seats vs. Crude-Oil and Natural-Gas Prices

There are a number of other examples of the trend. Seats at the Kansas City Board of Trade are at an all-time high, as are seats on the New York Cotton Exchange. Membership prices at the Coffee, Sugar & Cocoa Exchange have tripled since 2001 and are only about 18% off their all time-high.

In the markets, uncertainty is a fact of life. While we do our best to predict the future direction of prices, we can never know precisely how a trade will turn out. We're speculators, not magicians. No indicator is perfect, no system airtight.

But because prices aren't chaotic, and instead tend to move in trends, it is wise to examine those things with which a market is closely aligned. Exchange-seat prices, whose value is highly correlated with their particular trading privileges, offer a unique way to confirm a market's trend. And given the strength in both commodity prices and their corresponding memberships, it would appear that inflation isn't dead it's just quietly hiding from those without the foresight to see it.

Jonathan Hoenig is Managing Member at Capitalistpig Hedge Fund LLC.