1. commodity prices are determined by supply & demand. The trend of commodities usually persists for many years.
- bear market creates sharp reduction in capacity, and thus large supply & demand imbalance.
- bull market induces over-investment, thus increase in supply. However, it takes years to increase capacity.
3. Historically, commodities are tangible assets, no credit risk of itself and their values never fall to zero.
4. commodities prices can rise even when the economy is bad.
5. commodities returns outpace inflation.
6. history shows that war & political chaos push commodity prices higher.
