Hard assets and commodity prices are rising as loose monetary policies threaten to devalue currencies and heat up inflation. With Goldman Sachs projecting an 18% rally in commodities over the next year, investors could take a look at commodity exchange traded funds to follow the “vampire squid’s” bullish view.
Recently, analysts at Goldman Sachs projected a 18.2% return for the broad basket of commodities as reflected by the S&P GSCI Enhanced Commodity Index over the next 12 months and estimated the index to to gain 9% over the fourth quarter, reports Claudia Assis for MarketWatch. [Commodity ETFs to Fight Inflation]
In comparison, Goldman calculated a 9% increase in equities, a 2% rise for five-year corporate bonds and a 3% drop in 10-year Treasuries over the next 12 months.
Closely watched Goldman highlighted energy and industrial metals as the top performers for the next 12 months, with a 26.5% rise in energy prices, a 10% increase in industrial metals and a 6% gain for precious metals.
“Apart from being attractive in its own right, we also continue to see an overweight in commodities as a hedge against the risk of the impact of sharply higher commodity prices on economic growth and other asset classes, if oil supplies were to disappoint against a backdrop of very limited spare capacity,” the analysts wrote in a note to client.