Each day seems to bring widely reported new record prices for petroleum and gold, giving fresh reason for worry to the soothsayers of economic apocalypse. Petroleum and gold are not alone; copper, zinc, aluminum, and many other metals and mined commodities are at or near record price levels. Will prices rise forever? Quite the contrary.

The year 1980 is worth considering in contrast to our current situation. In 1980, petroleum prices were at record highs, and so too were many metal prices including gold. But those prices were artificially high because the economy in America had suffered through 10 years of mismanagement, and metals were then seen as a hedge against inflation and global instability. Inflationary monetary policy conspired with naive price controls to stunt the largest economy in the world. Our economy staggered, and so too did much of the rest of the world’s. The government of Iran measured its success by how well it could taunt and distract America, and it succeeded.

Metal prices are high today, but for entirely different reasons than in 1980. We have many economic problems, but they are the consequences of neither poor monetary policy nor price controls. Metal prices have risen in recent years not as a hedge against inflation or a source of stability amid global tension. Instead, metal prices are high for at least three largely distinct reasons.

First, the world economy has had three years of sustained growth, particularly in East Asia and South Asia. Unlike the 1970s, overall global economic activity today is at record levels, leading to record demand for commodities and metals. Second, many new technologies use metals for new applications, leading to increases in demand more rapid than the general level of economic growth. Third, environmental sensitivities to metal extraction industries, largely limited to a few countries just two decades ago, have spread around the world. Consequently, many mines are abandoned, and those that operate do so at much higher costs and with lower outputs.

High metal prices are ultimately passed through to businesses and consumers in the form of higher prices for manufactured products. But for companies engaged in the risky business of mineral exploration and extraction, these are the best of times. Companies such as Rio Tinto, BHP Billiton, Phelps Dodge, Southern Copper, Freeport Copper, and Kinross Gold are at or near record high equity prices. Mining companies were in disfavor in the 1980s and 1990s, and many sought bankruptcy protection. Strong metal prices to day have boosted the economies and stock markets in countries that are large metal exporters such as Australia, Brazil, Russia, and South Africa.

It is tempting to assume that high metal prices are here to stay. The year 1980 again provides a cautionary tale. The free market economist Julian Simon of the University of Maryland won a bet made in 1980 with the environmentalist Paul Ehrlich on the future prices of metal commodities. Mr. Ehrlich claimed the prices of five metals would rise after a decade while Mr. Simon bet prices would fall. Over the following decade, all five declined, for a variety of reasons ranging from expanded supplies to changes in technologies that led to diminished demand.

As in all markets, timing is everything, not that the prices of metals and other commodities will inherently decline (or rise) in the long run. Had Messrs. Simon and Ehrlich made the same bet in 1996, the results would have been exactly the opposite. Prices are simply reflections of supply and demand conditions, which are not on pre-destined – much less omnisciently known – trajectories.

There is at least one more similarity between today and 1980: Otherwise reasonable individuals are convinced that today’s high prices for basic commodities are headed upward permanently. It is perhaps the hubris of each generation to believe that the laws of economics are suddenly suspended and that prices are mysteriously set by anti-gravitational devices rather than the Newtonian mechanics of supply and demand. Nothing rises forever, not even commodity prices.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.