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
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