Goldman Sachs Says You Must Own Commodities in These Tense Times

Goldman Sachs Says You Must Own Commodities in These Tense Times-高盛:现在投资者持有大宗商品具有罕见的紧迫性
Published on: April 13, 2018
Author: Editor

The case for owning commodities has rarely been stronger, according to Goldman Sachs Group Inc.

With raw materials rallying on escalating political tensions across the globe and economic growth remaining strong, the bank’s analysts including Jeffrey Currie doubled down on their “overweight” recommendation. They reiterated a view that commodities will yield returns of 10 percent over the next 12 months, according to an April 12 note.

The Bloomberg Commodity Index, a measure of returns from 22 raw materials, is up more than 2.5 percent this week, the most in two months. A similar gauge, the S&P GSCI Index, has rallied over 5 percent this week to levels last seen in 2014.

The gains are being driven by crude, which is set for its best weekly jump since July, and aluminum, poised for its strongest rally since 1987. Oil investors are rattled by the potential for Middle East supply disruptions in the wake of the U.S. threatening to bomb Russian ally Syria, Saudi Arabia shooting down missiles fired by rebels in Yemen, and rising concern that America would reimpose sanctions on Iran and curb its exports.

In the aluminum market, U.S. sanctions on Russian producer United Co. Rusal, the biggest maker of the metal outside China, have sent buyers scrambling to find supplies.

“With low cross-asset correlations, increasing inflationary risks, a positive carry and the potential for oil supply disruptions in the Middle East, the strategic case for owning commodities has rarely been stronger,” the Goldman analysts wrote in their report.

Brent crude, the benchmark for more than half the world’s oil, has risen 7.2 percent this week to $71.96 by 6:56 a.m. in London on Friday. U.S. West Texas Intermediate futures are up 7.9 percent on the week at $66.99 a barrel in New York as the escalating tensions have taken investor focus away from concern that an American crude boom will undermine OPEC’s output curbs to clear a global glut.

The missiles fired at Saudi Arabia by pro-Iranian Houthi rebels in Yemen and the prospect of U.S. retaliation against Syrian President Bashar al-Assad — whose forces are backed by both Russia and Iran — for a suspected chemical weapons attack raises the risk of supply disruptions, Goldman said.

“The unilateral nature in the escalation of tensions so far suggests that the production impacts would likely be modest initially unless a military conflict occurs between Saudi Arabia and Iran,” the bank’s analysts wrote. “With low and declining inventories the market remains vulnerable to even small disruptions.”

Source: Bloomberg

Industrial Metals Oil & Gas