Posted Jun 4, 2013 by Martin Armstrong
Part of the reason when commodities must fall is largely due to the fact that a 13 year rally inspired the expansion of production. We saw the same thing develop into 1980 and the collapse thereafter shut down new mines. As prices fall, profits decline forcing the closure of marginal operations that became possible only because of the price advance.
As profits decline, production fall and thus the cycle for the next rally is being created. This is simply how things really function. Australian mining profits are down 49%.