Switzerland: Global Resources Investing Conference

Published on 13 June 2011

While silver’s recent fall of 30% has grabbed the headlines and commentators have gleefully predicted the end of the commodities bubble, much less attention has been focused on where prices actually are after the ‘crash’. Gold, for example, still trades at six times its 2001 low and silver approximately the same. The falls nevertheless demonstrate that investors are nervous and desperately keen to avoid getting caught in the same trap as in 1980. While the sentiment is understandable, we believe there are good reasons why the fundamental pressure on commodity prices remains upwards. In particular, this centres on negative real interest rates in the US, especially at the short end of the yield curve.

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