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They told us the commodities supercycle was over for gold in 2000 jokes DMCC boss Ahmed Sultan bin Sulayem

 -- Published: Sunday, 8 February 2015 | Print  | Disqus 

By Peter Cooper

Industry experts assembled in the Almas Tower at the Jumeirah Lake Towers in the Dubai Multi Commodities Centre today for the second annual Global Commodity Outlook Conference with the recent oil price collapse uppermost in their minds, and very few solid views on where the price would be going next. The same was also true for industrial and agricultural commodity prices in general.

‘Is the commodities supercycle really over?’ asked DMCC executive chairman Ahmed Sultan bin Sulayem in his opening remarks. ‘That’s what they said about gold in the year 2000 and look what happened next!’


This grounding comment set the tone for some inconclusive views from the many experts gathered to address the conference. The best oil price estimate probably came from industry veteran Gary R. King, managing partner of The Matrix Partnership, who saw the oil price ’settling around the mid-$60s and then getting to $80-90′.

Associate professor of finance at the JP Jain School of Global Management, John R. Talbott, put up a chart of the oil price expressed in grams of gold. This graph showed that current oil prices had not been this low in terms of gold since 1973. That looked like a market bottom.

Then again the author of ‘Mastering Commodities’ Francesca Taylor said that the bounce in prices last week could be a ‘dead-cat bounce’ and that oil prices could stay at around current levels for two to three years.

From the Gulf News editor-at-large Francis Matthews thought geopolitical issues from the Ukraine to the Iranian nuclear program pointed to higher oil prices coming back sooner rather than later. Money printing could also be a factor reviving the oil price.

Money printing

Professor Talbott cited the $60 billion euros a year in new money printing from the European Central Bank as reason to believe deflation in the eurozone would be short-lived. Hedge fund managers like Sam Zell have said recently that they think it was the ending of the Fed’s QE last October that brought the oil price crashing down, and not so much the supply/demand imbalance.

Is talk of the ending of the commodities supercycle overdone? Most probably yes, as Mr. Bin Sulayem pointed out almost nobody spotted gold’s potential to surge in 2000.

It is therefore unlikely that anybody will correctly call the end of the commodities supercycle which will be different for different commodities in anycase. Sugar is rather different to a bar of gold or barrel of oil… 

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 -- Published: Sunday, 8 February 2015 | E-Mail  | Print  | Source:

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