This is the most pessimistic verdict we have had on commodities since market tactics began. The prices of oil and gold have dropped back dramatically and demand has diminished in developing economies which have not been immune from the global recession.
The advisers' view...
Marlene Shalton, managing director, Chambers Morgan James Financial Management
I have been fairly bullish about commodities over the last few months, if only with a view to long-term investing. Holdings in gold, silver, coal and other commodities offer diversification in rocky times.
Prices have fallen, particularly in oil and gold, however China, India and other developing nations are still devouring raw materials, so prices should recover. Indeed, many commodities remain high by historical standards.
The world is in a recession so you may see lower prices for some commodities for a while, similarly for equities. When economies revive, commodities will probably revive first and go up the most.
Continue to buy commodities as a small part of an overall portfolio but proceed with care as to which ones you are going to favour.
