Upwards-only commodity price change is a lie

Have you been exposed to the great commodity swindle?

It goes something like this. The world is incapable of meeting the need of a rising population and growing economic wealth in developing markets. This challenge is being exacerbated by the quantity of physical resources around the world that are finite and, in some cases, commodities are actually in decline. Put these forces together and you have an inexorable upwards pressure on prices for everything from oil to grains, copper to gas. Easy, right? Well, think again.

Gas prices in the US have collapsed to 10-year lows. Coal prices have fallen by 30% in the US during the last 12 months. Metals, in US dollars, are down 21% year-on-year. Food commodities are down 8% in the past 12 months, while milk powder prices have fallen by 20% since the start of 2012.