The demand for most metals tends to increase over time. Moreover, as we discussed in this chapter and also in Chapter 5 these types of natural resource industries tend to be increasing cost industries. And yet the price of metals compared with other goods has tended to fall slowly over time (albeit with many spikes in between). The following figure, for example, shows an index of prices for aluminum, copper, lead, silver, tin, and zinc from 1900 to 2003 (adjusted for inflation). The trend is downward. Why do you think this is the case?

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Index of real prices 2.5 1.5 Long-run trend 0.5 1900 1920 1940 90 980 2000 Year