We've seen major commodity prices such as coal, iron ore and copper prices hammered this year alone. In recent months oil has taken a clobbering thanks to massive oversupply.
Oil looks to be headed lower in the short term, until higher cost production is removed from the market. That should equalise the market and see a gradual rise in the oil price – simple economics really.
But as we saw in the iron ore industry, higher cost Chinese production has been slow to come off, perhaps because many of China's iron ore mines don't really care where the iron ore price is for a number of reasons.
Oil may follow the same trend, and it's a case of who's going to blink first and cut production.
Now gold has already seen a large fall from above US$1,800 an ounce in August 2011, to the current price of around US$1,202 per ounce. But it could be the next commodity to see a swift fall in the spot price.
The major driver of a lower gold price is the recovering US economy, rather than supply and demand economics. In fact, the US economy has recovered so much since the GFC that the US Federal Reserve has ended its quantitative easing program, and is forecast to begin raising official rates next year.
With bonds yielding virtually nothing at the current low interest rates, higher interest rates will make US government bonds more attractive – particularly compared to gold, which returns nothing. That could see investors abandon gold exchange traded funds.
That could cause a whole new issue for Australia's beleaguered gold miners, including Newcrest Mining Limited (ASX: NCM), Northern Star Resources Ltd (ASX: NST), Regis Resources Limited (ASX: RRL) and OceanaGold Corporation (ASX: OGC). Newcrest and Northern Star in particular have gone against the trend and have had a great run this year, rising 32% and 48% respectively since January.
By comparison, the S&P/ASX 300 Metal & Mining (Index: ^AXMM) (ASX: XMM) has dropped 23%.
The one saving grace for the Australian gold miners is that the Australian dollar continues to fall. At the current exchange rate of 82.4 US cents, an ounce of gold is worth $1,458, substantially above most of the gold miners' all-in costs.
The question is, how low could the US dollar gold price fall?
