Commodities

The sheen has started to come off the commodity markets. After a year of non-stop price increases, the past few months have witnessed something of a correction. Since hitting $80 a barrel in July, WTI crude oil futures on the New York Mercantile Exchange have dropped by more than 25% to less than $60. In the metals markets, gold, copper and aluminium futures have all dropped - by 19%, 15% and 13%, respectively, as of October 24 - since hitting highs in May.

Of course, investors in many of these markets would still be up overall on the year, thanks to the surge in prices in the first half of 2006. And analysts point to the fact that the correction means these commodities are pricing at more rational levels.

Nonetheless, the drop off in prices does pose the question: how will investors react? Money has poured in from commodity rookies over the past few years, all keen to make a quick buck on the back of rising prices. Some have invested directly, but