Instability now, but solid ground lies ahead: after one of the greatest commodity rallies in history, prices virtually collapsed in the fourth quarter of last year. Heavy selling across all asset classes was the order of the day. The first half of this year saw a welcome reversal of the downward trend, but now the 'culture of fear' seems to be gripping the market. Where do we go from here?

African Business › Nbr. 2009, January 2009

Author: Morgan, M.J.

Position:: COMMODITIES

Linked as:

Summary

COMMODITIES

See the full content of this document

Extract

Instability now, but solid ground lies ahead: after one of the greatest commodity rallies in history, prices virtually collapsed in the fourth quarter of last year. Heavy selling across all asset classes was the order of the day. The first half of this year saw a welcome reversal of the downward trend, but now the 'culture of fear' seems to be gripping the market. Where do we go from here?

After last year's vicious battering, unsurprising in the wake of the severest shock to the global financial system since the Great Depression, the market consensus seemed to be that commodities had been oversold. After the G20 meeting and coordinated intervention by governments allayed market fears, it looked like there would be an eventual return to business as usual, even though it would take some time.

[ILLUSTRATION OMITTED]

The simple fact that the world...

See the full content of this document