The Future of the Commodity Price Boom

As late as 1999, oil was trading at $10 per barrel and gold at $250 per ounce, down from their nominal peaks in 1980 of $39 and $850 respectively. And that’s not even adjusted for the fact that the value of a dollar was a lot lower in 1999 than in 1980. Many pundits at the time argued that prices would continue to go down. The Economist had a cover in March 1999 entitled “Drowning in Oil” where it argued that oil would continue to fall well below $10 per oil. And gold was of course deemed a barbarous relic which would continue to fall in price as central banks continued to dump it. That forecast from The Economist turned out to be one of the worst in economic history — on a par with Irving Fisher’s stock-market forecast in 1929 — because just a few weeks later the price of oil started a new upward trend. As this article is written, gold is trading at over $800 and oil at $95. FULL ARTICLE