While not directly discussing global metals markets, this superbly-written and informative article from David McWilliams is well worth a read.

It gives a great historical perspective to the problems of economic stagnation that the Western world faces, comparing the deflationary ‘China effect’ of today with that of the ‘Argentina effect’ that occurred during the late 19th century, touching on both the economic and political implications.

Much of what we now term “secular stagnation” derives from the original China effect. The floor of incomes of industrial workers all over the western world is now set in Shanghai rather than Stoke. Countries that respond to this competitive threat by trying to borrow to maintain lifestyles will find themselves choked by low growth and rising debts.

This wider macroeconomic discussion and the reaction of the Western world to it has profound implications for all industries. But for the commodities sector, where price has such overriding importance, the impact will perhaps be most severe.


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