Over the past week, I've seen two sides to the commodities sector. In the central business district of Perth, Australia, there is little evidence that the boom is ending. Restaurants with prices high enough to scare off well-fed bankers were full, and service was woeful – reflecting a scarce pool of workers after the mining rush, and heady wage inflation even for low-skilled positions.
But I flew back into London just as commodity markets started tanking, led by a violent fall in gold prices, with bullion clocking up its sharpest one day drop since the 1980s (the price has since risen, but has not regained all its former ground).
Copper breached $7,000 a tonne on the London Metal Exchange, as China's weaker than expected first quarter GDP print of 7.7 per cent and lower IMF global growth forecasts served up a sell signal for traders.
The skyscraper Brookfield Place dominates Perth and symbolizes the hopes of the mining sector. Its major tenant is the world's biggest resources company BHP Billiton. The building was almost a casualty of the financial crisis, but eventually opened last year. The commodities sector defied the odds in 2008, but when conditions should now be improving, the reality is setting in that far too much money was splashed on expansion.
Analysts have scrambled to keep up with price declines. Barclays slashed its average gold forecast for the second time in about a month. Its bullion target in mid March was reduced to $1,646 an ounce for 2013. On Friday it cut the target again to $1,438. Barclays also reduced Brent crude, West Texas Intermediate and silver forecasts.
The mining giants have been executing a delicate balancing act, shedding excess while keeping hopes alive that commodities will stay stronger for longer. But even with fundamental shifts on the supply side, the market remains bearish. Societe Generale and S&P Capital IQ are adamant there is no entry point (even after the latest declines) until there is clarity on demand for commodities.
Also telling this week was the declaration from prominent Australian economist Shane Oliver of AMP Capital that markets are gradually realizing the commodities super-cycle is now over. The declaration that the boom is dead has yet to fully hit home, and we should be fearful of what that means for money still invested on a false promise.
Karen Tso is an anchor for Squawk Box Europe on CNBC. Follow her on Twitter @cnbcKaren