Commodities down 50% over last 5 years - why?

[My First Name Is Paul]

The Bloomberg Commodities Index (BCOM) is down about 50% over the last 5 years.

I work in the recycling industry and the metals we deal with are all down that much or more over the same time frame. Although there have been ups and downs, the trend has been overall strongly down, with one of the worst being Nickel, which is down over 60%.

Given all of the manipulations in various capital markets, it is not clear to me that these prices are falling because of free market increases in efficiency and it seems more likely due to something else. If someone can point me to a good explanation of why commodities have fallen so much, even if it is a reference material explaining the impact of Fed money creation on capital markets, that would be great.

 

[Anti Federalist]

Stronger dollar, compared to the rest of the world's funny money.

Decreased demand due to slowing economies.

 

[Ronin Truth]

More sellers than buyers?

 

[Madison320]

I'll admit I never expected them to fall like this. But I still believe it's only temporary and we're going to be in for a shock when prices reverse and go back up. I'm still looking for QE4 and then $200 a barrel for oil. I don't see how little pieces of paper that they keep printing can gain in value compared to a valuable, finite thing like oil.

 

[sam1952]

I think with energy - oil, natural gas, there is a glut in production. Coal is not in favor at the moment. I have no idea why other commodities are falling. Platinum at 913, gold at 1140 as I type this. Copper, nickel, no clue.

 

[My First Name Is Paul]

I'm not asking about just one commodity (oil), I'm asking about all of them. How is it possible that they are all going down so much? I don't really buy the currency claim because normally raw materials just fluctuate in price to reflect the international value. For example, the price of Lead went up in China (the only Chinese material price I watch) right along with their rapid currency devaluation.

It seems like if economies were performing so poorly, that over a 5 year period we would see supply sources shutting down and reducing output, sending the prices back up. They are generally not all working to reduce prices by 50% over 5 years all at the same time.

It seems like there is something else at work here that I don't know about or am not understanding. For example, are cheap loans being given to mining companies and they just keep pumping out material to minimally offset losses - rinse and repeat?

 

[John X]

I also didn't see this coming, but if I had to come up with a reason after the fact I would say that commodities were speculatively bid up before they crashed on the thought that inflation would be alot higher than it has been over the past 5 years. That coupled with unfavorable supply and demand dynamics has led to an absolute blood bath.

 

[nayjevin]

Subsidies?