The cyclical adjustment in metal prices is getting a little long in the tooth

John Robertson

The cyclical adjustment in metal prices is getting a little long in the tooth. The chart at (VIEW LINK) (see 16 September) updates the model used by PortfolioDirect/resources to track the progress of the metal price cycle. The current cycle (shown in the red line) will be 29 months old at the end of September 2013. The blue line in the chart shows, for the nine price cycles since 1960, the profile of the average adjustment following each cyclical price peak. The average magnitude of the peak to trough price fall across the nine cycles has been 29%. The shortest adjustment period occurred in the 14 months after September 2000 when the price indicator fell 31%. The most drawn out adjustments have taken 29 months after prices peaked in February 1980 and in February 1989. In each instance, prices fell 42%.


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