Background of Depressed Prices
The prices of raw materials were depressed and declining from, roughly, 1982 until 1998. From the mid-1980s to September 2003, the inflation-adjusted price of a barrel of crude oil on NYMEX was generally under $25/barrel. Since 1968 the price of gold has ranged widely, from a high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Gold Fixing).
The analysis of this period is based on the work of Robert Solow and is rooted in macroeconomic theories of trade including the Mundell–Fleming model. One opinion stated that
"The volatility and interest rates found its way into commodity inputs and all sectors of the world economy."
Hence, in the case of an economic crisis commodities prices follow the trends in exchange rate (coupled) and its prices decrease in case there are downward trends of diminishing Money Supply.
Foreign exchange impacts commodities prices and so does money supply: the advent of a crisis will pull commodities prices down.
Read more about this topic: 2000s Commodities Boom
Famous quotes containing the words background, depressed and/or prices:
“They were more than hostile. In the first place, I was a south Georgian and I was looked upon as a fiscal conservative, and the Atlanta newspapers quite erroneously, because they didn’t know anything about me or my background here in Plains, decided that I was also a racial conservative.”
—Jimmy Carter (James Earl Carter, Jr.)
“The depressed fall back exhausted from every undertaking.”
—Mason Cooley (b. 1927)
“On the breasts of a barmaid in Sale
Were tattooed the prices of ale;
And on her behind
For the sake of the blind
Was the same information in Braille.”
—Anonymous.