Ambrose Evans-Prichard, that mouthpiece of the City of London Establishment, has joined forces with Deutsche Bank to promote the nonsensical idea that commodity prices are at their peak.

Sell, sell, sell, he spews, because “oil will slide back towards its ‘marginal production cost’ of $60 to $80 a barrel; gold will slump to $650 an ounce as the dollar recovers against the euro; copper, lead and tin will slowly halve in price; grains will calm down as harvests in Australia and the Eurasian Steppe return to normal.”

And if there was any doubt he’s lost it completely … “Yes, oil and food price rises have pushed headline inflation to 4.1pc, but core inflation has fallen from 1.9pc to 1.8pc over the past year.” Oh yeah?

In a sense, I can see where he is coming from. He sees the onrushing collapse of global manufacturing as a result of the collapse of the financial system. So, he argues, the demand for commodities will also collapse.

Well, maybe it will. But any such effect will be more than compensated for by the fact simple fact that in the very near future, people aren’t going to want to invest in paper anymore, because they’ll finally realise that it’s all already worthless. Keep in mind, folks, that Gold is only a third of its inflation adjusted highs of the last century, the dollar isn’t going to recover against the euro, and does anybody actually know when harvests are going to return to normal in Australia and the Eurasian Steppe?

Update: Right on queue, as predicted by DB and Ambrose, commodity prices are retreating. So was Ambrose right after all? Nope. According to today’s FT speculators don’t have a clue which way to place their bets, “… hedge funds were almost equally balanced between those betting on further declines for oil prices and those expecting prices to rally” and “traders said the outlook for gold was becoming increasingly polarised with bulls encouraged by concerns over the likelihood of further problems in the US financial system and bears finding support from any bouts of dollar strength.”

Particularly for gold, that sounds like clutching at straws to me. Any downward price pressure is going to be more than compensated for, as I said, by the sad facts that the dollar is not going to recover, and oil production infrastructure is crumbling as fast as the financial system.