Many investors, feeling the effects of these developments on the beleaguered world equity and bond markets, turned their attention to bullish commodity markets looking for solid returns. However, since June this year, commodities across the board have seen a significant price correction, which many market commentators say is a direct reflection of the health of the global economy.

'The main reason for the price drop has been the indication that world economic growth has come down,' says Lieven Debruyne, chief executive and regional head of retail business in Asia at Schroder Investment Management (Hong Kong). 'We are coming out of a period where commodity prices have been rising rapidly, so it is logical that we would see some corrections.'

This slowdown has prompted many to question whether the commodities bull run is over. The response from commentators is mixed in the short to medium term, while optimistic in the long run.

'We tend to believe in the super cycle, and that the scarcity of raw materials is a reality, and that over the next five to 20 years prices will remain high on average,' says Philippe Schindler, an investment specialist with Swiss private bank Lombard Odier Darier Hentsch & Cie. 'We have experienced a special period where many factors played a role in raw material prices, including the weak dollar and hedging by financial actors through commodities,' he says.

This sentiment is supported by Yu Yingxi, a Singapore-based commodities analyst at Barclays Capital. 'Global demand concerns are definitely founded, but perhaps not to be overdone. We also see the emergence of China and other developing countries driving commodities growth. The impact is especially significant in base metal markets,' says Ms Yu, who believes that the commodities bull run still has legs.

'China accounted for more than 100 per cent demand growth for base metal demand last year. This demand has continued to increase - though at a slower pace - but because they are consuming so much in tonnage terms it is still a lot. By our current reading of fundamentals and investor activity, we do not believe that commodities are a 'speculative bubble about to burst'.'

Not everyone is as optimistic.

'The commodity bull run has been going on for several years, and, since we believe the global economy is cyclical, we believe this is the year that it finishes,' says Lawrence Kook, chief investment officer at Maxford Investment Management. He concedes that lingering supply side shortages and the emergence of super consumers, such as Brazil, Russia, India and China, will still provide price support in the short to medium term.

This poses a difficult situation for many investors: do they stay in commodities, hoping that prices have bottomed out, or sell up now and get back in when the market recovers?

'I think institutions will pull their funds from commodities and that is why you also see the oil price going down. This is also why we saw gold hit a high of US$1,030 in March and now it has come down to around US$820. This is a huge indication for us to look at commodities in general,' Mr Kook says. 'I feel they will put their money in less risk, less return instruments, such as money market and currency funds. These are the products that I think are more defensive - 2008 is definitely not a good year for equity investments, or asset management investments in general.'

Ms Yu believes volatility across commodities will remain high, but sees upside risks in the coming months for some sub-sectors, including oil, copper and aluminium. 'I think we could see a bit more weakness in the near term. We see US$115 to US$140 as the predominant range for crude - it is wide but given the current volatility not inconceivable. A range of US$110 to US$115 should represent a good buying opportunity,' she says.

Mr Debruyne agrees, and argues that now is the time for investors to get into pure commodity futures funds, especially those looking for long-term returns. 'Long term we feel that commodity prices will continue to rise. It goes back to basic supply and demand. It is not that easy to just simply rack up supply,' Mr Debruyne says.

Mr Kook cautions investors to consider the fundamentals of investing when selecting a strategy: assess your appetite for risk and make sure you have a diversified portfolio. 'It is also very important to remember that no one can time the market reliably - if they do, it's just luck,' he says.