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Commodity Prices: “Calm Before Another Storm”

Recent reports about several companies which have experienced weaker earnings or sales blame lower commodity prices:

  • Taiga's (TBL) Q2 sales decreased 16% due to lower commodity prices (Newswire.ca, Aug. 8)
  • Glencore earnings crash on commodity prices (Investorschronical.co.uk, Aug. 7)
  • Low commodity prices hammer hauler revenues (resource-recycling.com, Aug. 6)
  • Subdued commodity prices take a toll on Vedanta; stock hits 52-week lows (Business Standard, Aug. 5)
  • Shell (RDS.A) Q2 Earnings Miss as Commodity Prices Fall (Yahoo Finance, Aug. 1)

Yet, commodity prices have been trending lower for years now.

Here's a chart and commentary from EWI's August Global Market Perspective:

DeflationaryDip

This chart showing the decline in worldwide commodity prices makes a mockery of the efforts of central banks to induce inflation. In fact, the CRB index peaked at an all-time high of 471 in July 2008, and, after a countertrend peak in 2011, the index sank nearly 60% into its February 2016 bottom. Over the course of 2019, crude oil prices have dropped more than 17%. Natural gas prices are off nearly 20%. And propane prices have plunged an incredible 47%. The CRB index has traded sideways over the past two years, but it's probably the calm before another storm.

Prepare for that "storm" now by reading the free report, "What You Need to Know Now About Protecting Yourself from Deflation."

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