Last year we wrote how gold, then trading under $980 an ounce, was cheap at $1,000 because it hadn t remotely neared its inflation-adjusted peak, despite ascending to all-time highs. Since then, the yellow metal has risen another 30%.

The same potential holds true for livestock prices, which despite trading near nominal highs, are still nowhere near their peaks when adjusted for inflation. Since January 1966, when the Chicago Mercantile Exchange began trading livestock futures, cattle prices have dropped 0.93% annually on a constant-dollar basis, adjusted by the producer price index. Live hogs have fallen 0.88% each year. For cattle to reach the inflation adjusted high from the early 1970s, prices would need to climb an additional 164% from their current levels. Hogs would have to climb 168%. Are you ready to pay $8 a pound for bacon?

Constant-dollar Hogs and Cattle Since 1966, PPI-adjusted

Source: Bloomberg, Rosewood Research

This is the invisible hand of speculative, free, competitive markets. The productivity born from advanced farming technology has made premium proteins downright cheap.

In America, cattle and pork remain remarkably accessible luxuries despite trading near all-time-highs. The number of restaurant items that include bacon, for example, has grown 26% since 2005, according to research firm Mintel. As we pointed out last week, the average American need only work approximately 13 minutesIn Caracas, Venezuela Earlier this summer Burger King $7 pork rib sandwich proved so poplar the chain exhausted its supply. Simply put, even today s record prices haven t deterred demand.

More broadly, Americans spend only 9% of their disposable income on food, compared to 26% in Iran, 33% in China and over 45% in Pakistan. In capitalist America, lower income earners contend with obesity, not starvation.

In today s market, the trend is unquestionably livestock s friend. Agricultural commodities have soared in recent months, with coffee futures trading at 13-year highs and wheat, corn and oats spiking to levels not seen since 2008 s ethanol-prompted commodity debacle. A falling U.S. dollar has exacerbated the move.

The point is that, despite trading near all-time-highs, livestock still costs near what it did in the mid 1980s when inflation is taken into account. Given the public s insatiable appetite for meat, it s quite likely that the rodeo for iPath Livestock ETN isn t over just yet.

At the time of writing, Hoenig s fund help positions in many of the securities mentioned.