Why commodity prices are lower for longer

Below find some great charts from Goldies on why oil will be lower for longer:

This is a graphic illustration of the point I’ve been making about the entire commodity complex. Prices so high for so long have triggered an historic investment wave that will service the global economy for decades. Commodity investment will be weak a very long time and whenever demand rises it will be met not with price rises but a very swift response of more supply coming back on-stream using new but under-utilised infrastructure.

For a decade or more, virtually all major hard commodity markets will be supply elastic.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.