Since last December, demand destruction born of the global contraction has been hammering commodity prices across the board. Falling prices have been significantly pulling down inflation expectations.
With more of this downturn before us, and since inflation is a lagging indicator, I think it likely that inflation and commodities including gold may fall for some time yet.
This should be a good thing. Inflation was uncomfortably high the past few years. Cheaper commodity prices will help the world economy re-stabilize. In the meantime however, the re-stabilizing of commodity prices will prove very destabilizing for producing nations that are now caught unprepared... more »
