The Oil and Gold Booms Are Over
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The wreckage caused by China’s great, juddering slowdown continues to spread far beyond the country’s shores. Although most commodities enjoyed a bounce on May 3, after better-than-expected U.S. employment data, the plunge in their prices over the past few months suggests the past decade’s rally is truly broken.
For those of us not in the mining industry, this is actually good news -- one of the best signs yet that the global economy is returning to normal.
China’s voracious demand for every conceivable raw material -- oil, steel, soybeans, gold, to name a few -- once seemed to spell a future of endlessly rising commodity prices and falling living standards in developed nations. This was a Malthusian vision of scarcity: Rising demand from the growing economies of the emerging world would couple with shrinking supplies to drive up the prices of natural resources. Gas prices would never come back down; gold would cost thousands of dollars an ounce.
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