If you have not analyzed what outperformed equities in recent times, its time to look at the commodities rice charts. Commodities, right from oil to base metals to precious metals to even the so-called soft (agri) commodities, have delivered returns that were unheard of in the past. The remarkable rise in commodities prices has also meant that they are no longer a mundane stuff. And the commodity bulls who have made merry as a result of the unprecedented run-up in commodity prices claim that the excitement has just begun.

To the surprise of many, commodi-ties are hot stuff now. If it ap-pears unbelievable just take a look at the prices of a host of commodities in the futures market as they have gone through the roof in recent times. For instance, precious metals have become dearer. Gold has had a golden run as it touched a 26-year high this May. Silver too is not far behind; the price of the poor man's gold too has risen sharply, in tandem with the bullish trend in gold and other precious metals like platinum and palladium. In fact, prices across all the commodities, be it base metals or agricultural commodities, have touched historic highs in an unprecedented bull run, surprising many. The rub-off effect of this has been seen on stocks of firms which mine or trade into these commodities. Metal stocks, in tune with the global trend, have recorded huge gains, boosted by record prices of copper, aluminum, and zinc, whose prices have more than doubled in the last one year. Buoyed by these movements the BSE Metal Index, in fact, outperformed the broad market index, Sensex by a huge margin. Surprisingly, commodity prices have shown great resilience, so far, as they have rebounded sharply after every pull down. And going by the several commodity bulls, the bull run is here to stay.

However, it was not the case always. Until 2001, commodity markets across the globe were lying low. Prices of all the major commodities had gone down so much that it almost became economically unattractive for producers to pump money in finding new mines and sources. The collapse in commodity prices exacerbated in 1997 as an economic crisis gripped the then fast growing East Asian economies, then the big importers of raw materials, thanks to their happening infrastructure sector. The fall in commodity prices accelerated further as big commodity producers like Brazil and Russia resorted to cheap exports so as to support their cash-strapped economy. The commodity prices, as a result, went further down into a tailspin. "But the world's economic slowdown is only part of the explanation", commented The Economist in its April 15, 1999 edition. It commented that some of the blame also goes to a big increase in supply as a result of extra capacity that was planned when prices were high, but is only now coming into the stream. "This is typical of the commodity cycle: A big price increase boosts investment, and excess supply then reduces prices.

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