Are Real Commodity Prices at multi-century Lows?

The graph below, courtesy of BHP Billiton CEO Chip Goodyear, was compiled from a variety of sources, including the US All Commodities Producer Price Index, US Consumer Price Inflation, US Bureau of the Census, Historical Statistics of the United States, and the Colonial Times, to 1970.

A small move on the graph represents several decades. According to the graph’s creator, "we find ourselves at a period of time which is, or rather close to it anyway, 2001/2002 when real commodity prices were the lowest they’ve been in the last 200 years which essentially puts them at the lowest price they’ve been in known history.”
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click for larger graph

Us_commodity_prices_cpi_adj

Chart courtesy of Mineweb

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The  International Monetary Fund reached a similar conclusion — two years ago.

Cycles in Real Price of Industrial Commodities, 1862–1999

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Real_prices_commodities18621999_

Chart courtesy of IMF

Notes: Shaded portions denote the boom phase, and unshaded portions the slump phase, of each
commodity-price cycle. A boom (slump) is defined as a sequence of absolute increases (decreases) in the real price of industrial commodities.

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Nominal and Real Price Indexes Industrial Commodities, 1862–1999
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Nominal_vs_real_price_18621999_1

 

Chart courtesy of IMF

Sources:
The graph everyone’s talking about
Barry Sergeant
Mineweb, ’25-AUG-05 11:00
http://www.mineweb.net/sections/mining_finance/476223.htm

The Long-Run Behavior of Commodity Prices: Small Trends and Big Variability
PAUL CASHIN and C. JOHN MCDERMOTT
2002 International Monetary Fund
http://www.imf.org/External/Pubs/FT/staffp/2002/02/pdf/cashin.pdf

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