“Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”
Of all conflicts in the ancient world, few were more devastating than the Punic Wars of 264 to 146 BC, fought between Rome and the Phoenician city of Carthage. If history is still taught in our schools, schoolboys will be familiar with the role played by the Carthaginian general Hannibal, who during the Second Punic War famously crossed the alps with a battalion of war elephants. At the Battle of Cannae (216 BC) Hannibal surrounded and slaughtered a Roman army virtually twice his size; between 50,000 and 70,000 Roman soldiers were killed in a single day. The Third Punic War was driven by the notorious Roman hawk and senator Cato the Elder, who was given to ending every one of his speeches with the phrase ‘Carthago delenda est’ – ‘Carthage must be destroyed’. In 146 BC, the Romans under Scipio Aemilianus invaded the city, systematically destroyed it, and sold the surviving 50,000 or so inhabitants into slavery. According to legend, the victorious Romans sowed the fields with salt to ensure that the land would remain barren forever.
Some of the consequences of war should be obvious. Others, though obvious to historians after the fact, seem to take the belligerent players by surprise. What follows, courtesy of Grok, is an abridged account of the 1970s.
“The 1970s saw one of the most dramatic commodity price booms in modern history, with sharp rises across energy (especially oil), food (grains like wheat, corn, soybeans), metals (copper, aluminum, zinc, scrap metal), and other raw materials. This contributed heavily to widespread inflation (often double-digit) and the era’s infamous stagflation (high inflation + stagnant growth + rising unemployment).
“Key Price Trends
“Oil — The standout case: Prices quadrupled from around $3 per barrel in early 1973 to nearly $12 by early 1974 after the first shock, then doubled again (peaking near $40 nominal in 1980) after the 1979 shock. Adjusted for inflation, these were massive real increases.
“Food/agricultural commodities — Wheat, corn, and soybeans surged dramatically in 1971–1974 (often doubling or more), driven by poor harvests and strong demand, then fell somewhat before rising again later in the decade.
“Metals and industrial raw materials — Prices rose sharply in 1972–1974 (e.g., nonferrous metals up over 100% in some cases, scrap metal nearly quadrupling in places), often matching or approaching oil’s pace in cumulative gains during the peak boom years. Broader indices (e.g., Economist all-items commodity index) showed extraordinary volatility, with some of the largest annual increases on record (e.g., 63% in one year during 1972–1973).
“Overall, many commodity prices rose 100–300%+ in nominal terms during the early-to-mid 1970s peaks, far outpacing the relative stability of the 1950s–1960s.
“Prices eased somewhat during the 1975 recession but recovered strongly later (e.g., 1976–1979), ending the decade much higher than at the start — even in real (inflation-adjusted) terms for many items.
“Main Reasons for the Boom
“The surge wasn’t due to one factor but a “perfect storm” of overlapping causes:
“Monetary expansion and dollar devaluation
“The end of the Bretton Woods gold standard (1971 Nixon shock) led to dollar devaluations (1971 and 1973). Loose monetary policy worldwide (fuelled by U.S. deficits, including Vietnam War spending) flooded global markets with dollars, boosting demand for commodities as an inflation hedge and pushing prices up broadly.
“Strong global demand boom
“Unprecedented simultaneous economic expansions in the U.S., Europe, and Japan peaked in 1972–1973 — the first post-war global business cycle synchronization. This created excess demand for industrial commodities (metals, raw materials) and food, with industrial production growing faster than in prior decades.
“Major supply shocks
“1973 Oil Crisis — Arab OPEC members (OAPEC) embargoed oil exports to the U.S. and allies supporting Israel in the Yom Kippur War, plus production cuts. This quadrupled prices almost overnight.
“1979 Oil Shock — Iranian Revolution disrupted supply, doubling prices again.
“Agricultural shocks — Widespread crop failures/bad weather (e.g., 1972–1974 Soviet grain shortages, poor global harvests) reduced food supply.
“Other disruptions included labour issues in mining and geopolitical events affecting supply chains.
“Speculative and feedback effects
“Rising inflation expectations created a self-reinforcing cycle: Higher commodity prices fed into broader cost-push inflation (energy/food as inputs everywhere), which spurred wage demands and further price hikes. Commodities became a hedge against currency debasement and inflation.
“Some analyses emphasize that oil shocks were partly symptoms of prior inflation and demand pressures rather than pure exogenous causes — industrial commodity prices (e.g., metals) often rose sharply before the 1973 oil spike. The result was severe economic pain: stagflation plagued the decade, with recessions in 1973–1975 and 1980, high unemployment, and inflation peaking over 13% in the U.S. in 1980. It took aggressive monetary tightening (under Fed Chair Paul Volcker in the early 1980s) to finally break the cycle.This era remains a benchmark for how commodity shocks can amplify inflation and disrupt growth when combined with loose policy and global demand pressures.”
Technical analysis matters. The 1970s for commodities prices represented the biggest technical break-out – after a 100 year base – in history. More recently, silver (for example) has broken up through a 45-year ‘cup and handle’ formation, which suggests further dramatic gains to come. Recipe for a historic game-changing rally by real assets:
- Multiple foreign wars, including wars in the Middle East
- Insufficient spending on core energy and materials extractive infrastructure
- Longstanding and accelerating currency devaluation
- Unsustainable build-up of government indebtedness
- Ongoing political hubris, policy interventions, and grandstanding policy promiscuity.
In a typically excellent Substack post, ‘Keir Starmer Saves the World’, the pseudonymous ‘Escape Key’ neatly skewers the active and activist pretentions of the economically loathsome Starmer regime: in every scenario highlighted – adopting EU legislation on AI; adopting central bank digital currency; signing off on a Net Zero Implementation Order.. – the country is better off if its Prime Minister simply doesn’t show up. The piece is worthy of Jonathan Swift. As a latter-day Cato might opine: Gubernatio delenda est. Government itself must be destroyed.
Intriguingly, ‘Carthago delenda est’ is not the only line from the Punic Wars that has survived into the history books. After the final destruction of the city, the Roman commander Scipio Aemilianus is said to have wept as he watched the city burn, and he quoted from Homer’s ‘Iliad’:
“A day will come when sacred Troy [itself] shall perish,
And Priam and his people shall be slain.”
In other words, Scipio, at the moment of triumph, came to the sobering realisation that no power, not even that of Rome, lasts forever.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds.
“Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”
Of all conflicts in the ancient world, few were more devastating than the Punic Wars of 264 to 146 BC, fought between Rome and the Phoenician city of Carthage. If history is still taught in our schools, schoolboys will be familiar with the role played by the Carthaginian general Hannibal, who during the Second Punic War famously crossed the alps with a battalion of war elephants. At the Battle of Cannae (216 BC) Hannibal surrounded and slaughtered a Roman army virtually twice his size; between 50,000 and 70,000 Roman soldiers were killed in a single day. The Third Punic War was driven by the notorious Roman hawk and senator Cato the Elder, who was given to ending every one of his speeches with the phrase ‘Carthago delenda est’ – ‘Carthage must be destroyed’. In 146 BC, the Romans under Scipio Aemilianus invaded the city, systematically destroyed it, and sold the surviving 50,000 or so inhabitants into slavery. According to legend, the victorious Romans sowed the fields with salt to ensure that the land would remain barren forever.
Some of the consequences of war should be obvious. Others, though obvious to historians after the fact, seem to take the belligerent players by surprise. What follows, courtesy of Grok, is an abridged account of the 1970s.
“The 1970s saw one of the most dramatic commodity price booms in modern history, with sharp rises across energy (especially oil), food (grains like wheat, corn, soybeans), metals (copper, aluminum, zinc, scrap metal), and other raw materials. This contributed heavily to widespread inflation (often double-digit) and the era’s infamous stagflation (high inflation + stagnant growth + rising unemployment).
“Key Price Trends
“Oil — The standout case: Prices quadrupled from around $3 per barrel in early 1973 to nearly $12 by early 1974 after the first shock, then doubled again (peaking near $40 nominal in 1980) after the 1979 shock. Adjusted for inflation, these were massive real increases.
“Food/agricultural commodities — Wheat, corn, and soybeans surged dramatically in 1971–1974 (often doubling or more), driven by poor harvests and strong demand, then fell somewhat before rising again later in the decade.
“Metals and industrial raw materials — Prices rose sharply in 1972–1974 (e.g., nonferrous metals up over 100% in some cases, scrap metal nearly quadrupling in places), often matching or approaching oil’s pace in cumulative gains during the peak boom years. Broader indices (e.g., Economist all-items commodity index) showed extraordinary volatility, with some of the largest annual increases on record (e.g., 63% in one year during 1972–1973).
“Overall, many commodity prices rose 100–300%+ in nominal terms during the early-to-mid 1970s peaks, far outpacing the relative stability of the 1950s–1960s.
“Prices eased somewhat during the 1975 recession but recovered strongly later (e.g., 1976–1979), ending the decade much higher than at the start — even in real (inflation-adjusted) terms for many items.
“Main Reasons for the Boom
“The surge wasn’t due to one factor but a “perfect storm” of overlapping causes:
“Monetary expansion and dollar devaluation
“The end of the Bretton Woods gold standard (1971 Nixon shock) led to dollar devaluations (1971 and 1973). Loose monetary policy worldwide (fuelled by U.S. deficits, including Vietnam War spending) flooded global markets with dollars, boosting demand for commodities as an inflation hedge and pushing prices up broadly.
“Strong global demand boom
“Unprecedented simultaneous economic expansions in the U.S., Europe, and Japan peaked in 1972–1973 — the first post-war global business cycle synchronization. This created excess demand for industrial commodities (metals, raw materials) and food, with industrial production growing faster than in prior decades.
“Major supply shocks
“1973 Oil Crisis — Arab OPEC members (OAPEC) embargoed oil exports to the U.S. and allies supporting Israel in the Yom Kippur War, plus production cuts. This quadrupled prices almost overnight.
“1979 Oil Shock — Iranian Revolution disrupted supply, doubling prices again.
“Agricultural shocks — Widespread crop failures/bad weather (e.g., 1972–1974 Soviet grain shortages, poor global harvests) reduced food supply.
“Other disruptions included labour issues in mining and geopolitical events affecting supply chains.
“Speculative and feedback effects
“Rising inflation expectations created a self-reinforcing cycle: Higher commodity prices fed into broader cost-push inflation (energy/food as inputs everywhere), which spurred wage demands and further price hikes. Commodities became a hedge against currency debasement and inflation.
“Some analyses emphasize that oil shocks were partly symptoms of prior inflation and demand pressures rather than pure exogenous causes — industrial commodity prices (e.g., metals) often rose sharply before the 1973 oil spike. The result was severe economic pain: stagflation plagued the decade, with recessions in 1973–1975 and 1980, high unemployment, and inflation peaking over 13% in the U.S. in 1980. It took aggressive monetary tightening (under Fed Chair Paul Volcker in the early 1980s) to finally break the cycle.This era remains a benchmark for how commodity shocks can amplify inflation and disrupt growth when combined with loose policy and global demand pressures.”
Technical analysis matters. The 1970s for commodities prices represented the biggest technical break-out – after a 100 year base – in history. More recently, silver (for example) has broken up through a 45-year ‘cup and handle’ formation, which suggests further dramatic gains to come. Recipe for a historic game-changing rally by real assets:
In a typically excellent Substack post, ‘Keir Starmer Saves the World’, the pseudonymous ‘Escape Key’ neatly skewers the active and activist pretentions of the economically loathsome Starmer regime: in every scenario highlighted – adopting EU legislation on AI; adopting central bank digital currency; signing off on a Net Zero Implementation Order.. – the country is better off if its Prime Minister simply doesn’t show up. The piece is worthy of Jonathan Swift. As a latter-day Cato might opine: Gubernatio delenda est. Government itself must be destroyed.
Intriguingly, ‘Carthago delenda est’ is not the only line from the Punic Wars that has survived into the history books. After the final destruction of the city, the Roman commander Scipio Aemilianus is said to have wept as he watched the city burn, and he quoted from Homer’s ‘Iliad’:
“A day will come when sacred Troy [itself] shall perish,
And Priam and his people shall be slain.”
In other words, Scipio, at the moment of triumph, came to the sobering realisation that no power, not even that of Rome, lasts forever.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds.
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