| Are commodities over-valued? There are two schools of thought on the subject, one that says constrained supply and surging demand from emerging markets is the key driver of price, and the other that suggests high prices are a consequence of market speculation (boosted by cheap money).
McKinsey’s annual commodity report, released on Thursday, gives succour to the latter group. The chart below shows average commodity prices since 1980, combining metal, food, energy and raw material prices. Average prices are about 12 per cent down on their 2008 peak – but they are still more than double what they were in 1980. The commodity super-cycle “isn’t dead”, it suggests...............................................Full Article: Source
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