Metal prices fall more than during Great Depression
According to research by Barclays Capital, the price of key industrial metals has fallen further over the last four months than occurred during the worst years of Great Depression between 1929 and 1933.
"Kevin Norrish, Barclay's commodities strategist, said "the average fall in the price of copper, lead, and zinc has been roughly 60pc since the peak in July this year. All three metals were traded on the London Metal Exchange in the inter-war years so it is possible to make a comparison".
Prices for the three metals fell 40pc from their highs in 1929 before touching bottom in 1933, with the bulk of the fall in 1930 as the slump spread worldwide.
"Lead and zinc have already lost more than they did in the 1930s," he said.
Copper was hit hardest during the Depression, despite the electrification drive in the US and the Soviet Union, falling 70pc at one stage before creeping back in the mid-1930s. The reason was an 85pc fall in US construction, then the biggest user of the metal.
Barclays Capital said the broader equity markets are already discounting the sorts of "savage declines" in corporate profits that were last seen in the Slump. It said (trailing) price to earnings ratios are actually lower now than they were the early 1930s, with moves in credit spreads that suggest investors are anticipating depression-era levels of economic contraction.
The credit markets continued to exhibit signs of extreme stress yesterday. The iTraxx Crossover index measuring default risk on low-grade European bonds punched above 950 for the first time. The investment grade index hit 188. The spreads are now flashing the sort of danger signals seen before the collapse of Lehman Brothers in September.
Register here to be notified of Proactiveinvestors One2One Forums.
Other Australia Market Wrap articles
-
12/03/10 Circadian Technologies to present at Ultimate Healthcare & Biotechnology Event, March 24
-
12/03/10 Lithium and rare earths markets poised for growth
-
11/03/10 Tantalum market outlook
-
11/03/10 Silver price bounces back
-
10/03/10 As Confidence Returns, Gold Will Rise - Sprott's John Embry
-
10/03/10 Molybdenum prices to rise on market uncertainty
-
09/03/10 Gold prices moving again
-
09/03/10 Coking coal: back on proverbial fire
-
05/03/10 NuPower Resources, TNG, Bandanna Energy at One2One "Emerging Stars in Resources" Investor Event
-
05/03/10 Austar - HD to boost subscriber growth
Other Australia Market Wrap news
-
10/03/10 New Standard Energy Seeks to open Australian shale gas province
-
10/03/10 Krucible Metals sees further potential for high grade copper at Pilgrim in QLD
-
10/03/10 Groote Resources commences trading under new name
-
10/03/10 Hunnu Coal to acquire additional thermal coal project in Mongolia
-
10/03/10 Rimfire Pacific Mining further defines platinum system at Fifield NSW
-
09/03/10 Crossland Uranium Mines ups ante on NT uranium projects
-
09/03/10 MEG study finds '09 exploration budgets suffered steepest decline
-
08/03/10 AWH Corporation to acquire Turkish uranium project
-
08/03/10 Chinese coal production at low end of target
-
08/03/10 Magnesium prices still erratic