| The commodity super-cycle, in which commodity prices reach ever-higher highs, and fall only to higher lows, is not over. Despite the euphoria around shale gas – indeed, despite weak global growth – commodity prices have risen by as much as 150 per cent in the aftermath of the financial crisis. In the medium term, this trend will continue to pose an inflation risk and undermine living standards worldwide.
For starters, there is the convergence argument. As China grows, its increasing size, wealth, and urbanisation will continue to stoke demand for energy, grains, minerals, and other resources. For example, the US consumes more than nine times as much oil as China on a per capita basis. As more of China’s population converges to Western standards of consumption, demand for commodities – and thus their prices – will remain on an upward trajectory...............................................Full Article: Source
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