The hype about a supposed “super-cycle” at the start of the decade has been replaced by fears of a prolonged period of “secular stagnation” in commodity prices. As usual, the reality lies somewhere in between. We therefore believe that market sentiment towards commodities is now unduly pessimistic. Our view is that cheaper oil is here to stay and the prices of many agricultural commodities will remain subdued too. But the resulting downward pressure on inflation should help the recovery in the global economy, boosting the prices of industrial metals. Precious metals should also do well, although silver is likely to outshine gold.
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