A surprisingly strong U.S. employment report sent gold prices falling yesterday, while other metals advanced as investors bet that a stronger U.S. economy will mean a jump in demand for basic materials. Gold for December delivery settled at $959.50 (U.S.) an ounce, down $3.40.

Nickel prices have doubled in recent months but are still well below their highs, and rebounding crude oil is selling for about half the price it sold for last summer.

Goldman Sachs, for one, believes that commodities have a long way to go. Sure, they lost some credibility last summer when analysts predicted that oil would rise to $200 (U.S.) a barrel, only to fall as low as $34 a barrel earlier this year.

Still, its bullish stand on commodities is relatively solid: They believe that supply shortages are the biggest impetus for price increases, beginning next year, because companies haven't been investing enough in future production. That in turn is the result of the recent double-whammy of lower commodity prices and tight credit conditions, which sidelined many projects.

When demand rises with an improving global economy, this weak supply will send commodity prices shooting higher. Sounds reasonable enough. And if the future unfolds according to plan, Newfoundland - and the commodity producers that operate there - will indeed find themselves in a sweet spot.

Vale SA, the Brazilian-based metals producer, is a good company to keep an eye on. Although its Canadian holdings account for a relatively small slice of its global operations, they are growing fast with the extensive nickel, copper and cobalt deposits in Voisey's Bay.


CLOSING PRICES (SPOT)

Nickel US$/lb 8.87 0.01

Copper US$/lb 2.79 0.06

Gold US$/troy ounce 954.75 -8.80

Silver US$/troy ounce 14.61 0.04

Lead US$/lb 0.85 0.02

Zinc US$/lb 0.85 0.02

Aluminum US$/lb 0.90 0.01

Oil West Texas US$/bbl 71.89 -0.05

Nat Gas Henry Hub US$ mmbtu 3.57 -0.21

Nat.Gas AECO C C$/gigajoule 3.22 0.04

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