Have you ever wondered what drives commodity prices?  

Basic economics tells us that is it supply and demand but what is the driver of demand for commodities?  The answer is global economic growth. 

Many analysts agree that we entered a commodity supercycle in 2000 triggered by very high growth in China.  While it is true that commodity prices have fallen recently, it is likely that this is nothing more than a mid course correction in the continuity of long-term commodity price appreciation.

Most commodities themselves trade and so are subject to irrational highs and lows instead of slow steady growth.  Supercycles, like the one we are in currently, are created by expanding markets; the billions from China, India, Brazil and Indonesia et al wanting to join the global middle class.  It is my opinion that they will produce the greatest market expansion of all time.

Demand for steel-making raw materials such as iron ore, nickel, tungsten, manganese, chromium and vanadium will likely significantly exceed supply in the long run.

Typically supercycles last 30 to 40 years but are known for being highly volatile; but in the long-run volatility can be your friend with market peaks climbing higher with each new upward surge.

The current prices for all of basic commodities are at much higher levels than even five years ago.  With globalization in full bloom, it is likely that this cycle will last longer than past cycles, which means prices may have another couple decades of growth.