Have patience with commodities

Commodity prices and mining profits look likely to be depressed for a while yet. But, says Merryn Somerset Webb, the economic downturn's very severity is sowing the seeds for the next huge rise in commodity prices.

Anyone who thought the path of the commodities 'supercycle' would be a smooth one would have been in for a shock this year. Just look at the performance of the miners.

At their peak, back in May, shares in Xstrata traded at £44. Around the same time, BHP Billiton hit £22. And Rio Tinto, £71. They now trade at £8.40, £8.20 and £22.40 respectively. Nasty isn't it? So much so that even those who were muttering about how overvalued the miners were six months ago are now talking about it being time to buy in. My guess is that they'll be sorry if they do so. The truly horrible recession (or depression) ahead of us means that there is every chance that commodity prices and hence mining profits will go much lower before things get better.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.