Last year, while the economic crisis gathered steam Chinese steel prices plummeted and companies responded by running down inventories. Even with the infrastructure stimuli announced by the Chinese government, the recent surge in iron ore imports was a miscalculation by the Chinese steel industry. As you can see in the chart above, re-stocking has sent domestic steel prices back to the levels below the initial crash, and they’re still headed south, indicating that further contraction of the Chinese economy is baked in the cake.

Commodity investing at a time when the world’s largest economies are contracting doesn’t appear sensible, but not all metals are created equal. In fact, over the same period that the U.S. has suffered two economic recessions, including the current one, gold has sustained an eight-year bull market.

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