Global investment bank Goldman Sachs urged investors to buy commodities now and worry about recessions later. The firm’s analysts see commodities as “the best asset class to own in the late-cycle phase when demand is outpacing supply.” On the other hand, “stocks could suffer as inflation remains high and the Fed is more likely to surprise hawks,” Goldman noted.
Goldman Sachs Recommends
Buy Commodities Now
Goldman Sachs, the global investment bank, is recommending that investors buy commodities. In a note titled “Buy commodities now, worry about the recession later,” released Monday, Goldman said, “Our economists see relatively low risk of a recession outside of Europe over the next 12 months.” He wrote.
Oil is the last resort in times of severe energy shortages, and we believe a pullback in the overall oil complex would provide an attractive entry point for long-only investments.
In the US, Federal Reserve Chairman Jerome Powell said last week. ‘We are taking forceful and expeditious steps to ensure that demand is better aligned with supply and to anchor inflation expectations. We will continue to do so until we are convinced that the job is done.”
In addition, European Central Bank (ECB) board member Isabelle Schnabel noted Saturday that central banks around the world risk losing public confidence and must act forcefully to fight inflation, even if it sets the economy back.
“From a cross-asset perspective, stocks could suffer as inflation remains high and the Fed is more likely to surprise hawks,” the Goldman analyst elaborated.
Commodities, on the other hand, are the best asset class to hold during late cycle phases when demand is outpacing supply.
Late-cycle phases typically see inflationary pressures build and the economy progresses past its peak rate of economic growth.
Goldman Sachs also urges caution.” We recognize that the macro environment remains challenging and that the U.S. dollar could rally further in the near term.”
Curry, who heads commodities research at Goldman Sachs, believes that recessions are a natural part of the long commodity supercycle. He told Reuters last November.” We expect a structural bull market in commodities very similar to what we saw in the 2000s and 1970s.”
This analyst told CNBC in June that we are at the beginning of a commodity supercycle. He opined, “This is the first inning of a commodity supercycle – it’s not just oil and gas, it’s metals, mining, it’s agriculture – because this sector has suffered from over a decade of underinvestment.”
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