In my view, the long commodities cycle, the so-called Kondratiev, lasts 45 to 60 years. There's no precise date. Now, if we assume that the commodities cycle peaked out in 1980, then we had a bear market until '99 – so in other words, an almost 20-years bear market. And after ''99 I think the Kondratiev cycle started to move up. We're now 2014 so we're essentially 14 years in the upward wave that usually on average lasts something like 22 years – sometimes more, sometimes a bit less. The commodities cycle from '99 to 2007, 2008 was driven by incremental demand from China. That is a big factor. The demand from China may weaken somewhat and for sure it will not grow at the same rate but it will not collapse. It may not go up a lot and in the face of industrialization first commodities demand goes up a lot but then it starts to level off.
But in my view, what can also drive commodity prices, because I'm on the board of some mining companies, and I can tell you that nobody will drill for oil if oil is less than, say, $70 a barrel. Nobody. And the copper price in 1998 was 68 cents a pound, precisely 58 cents a pound at its low. Nobody will look for a new copper mine and produce below, say $2 a pound.
The costs today of exploration and bringing the commodities to the markets are astronomical and you can also thank the Federal Reserve for that. So if people think that oil will be significantly lower than what oil is now, they're dreaming. It may drop one day to $60 for a few months, but on a long-term basis, in my view, with all the geopolitical problems, with the problems of finding new oil, with many oil fields having less and less production, in my view, the risk for oil is rather on the upside than the downside.