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Best Time In Decades To Own Commodities

BEST TIME IN DECADES TO OWN COMMODITIES

Goldman Sachs Commodities Chief Anna Golubova  Tuesday January 23, 2018 20:19 (Kitco News) 


This year is looking great for commodities, said Jeffrey Currie, global head of commodities for Goldman Sachs, pointing out that the macro environment is set up to help prices move higher. 

“For the first time in years we have a positive carry to own commodities more broadly,” Currie told CNBC on Tuesday. 

The reason for this is the positive macro backdrop, which Currie described as the “best in decades for owning commodities.” 

This environment is created by three Rs: reflation, reconvergence of global growth and releveraging. “You put those three together, they create a positive macro backdrop, the best since 2004,” he said. 

Goldman Sachs commodities chief explained that inflation is projected to run at a quicker pace, as global economies continue to grow and borrowing rises. 

Currie added that commodities are estimated to outperform stocks this year. 

“It has a lot to do with the fact that the equity market has the wind in its sails. It had a great year last year. Commodities had a miserable year,” Currie said. 

Goldman Sachs’ outlook supports owning a broad range of commodities but notes that metals are likely to do better than energy. 

“You have a lot of potential price upside in the base metals complex,” Currie mentioned. In the meantime, the energy sector might struggle with oversupply brought about by new technologies, such as hydraulic fracturing and horizontal drilling, he added. 

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