The U.S. Federal Reserve is injecting a healthy dose of fear in the capital markets as they look to continue tightening monetary policy. However, this isn’t fooling some market analysts, and overblown recession risks could open up a pathway to strength in commodities.
“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Fed Chair Jerome Powell said. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
However, global investment firm Goldman Sachs sees things differently. Overblown recession risks mean that investors should give commodities a closer look and take advantage of the current value they offer.
The firm, per a Yahoo Finance report, “is urging investors to consider investing in things like oil, petroleum products, aluminum, wheat, corn and sugar. It says that the recession risks faced by global markets face are overblown in the near term. Goldman predicts that the U.S. and China will be able to avoid a recession and that a recession would be largely confined to Europe.”
“Goldman has raised its forecast for the entirety of the S&P GSCI commodity index on a 12-month basis to 38.8%,” the report added. “Energy was the highest at 51.7%. However, there is something more to be learned from its projections.”
Get Broad Commodities Exposure
Investors looking to get commodities exposure can consider a pair of exchange traded funds (ETFs) from Teucrium. Getting exposure via ETFs means that investors don’t have to hold various positions to get diversification in commodities.
Investors can have it all in the convenience of one ETF: the Teucrium Agricultural Fund (TAGS). The fund combines exposure to corn, wheat, soybeans, and sugar through other Teucrium ETFs that focus specifically on these commodities, essentially offering investors a fund of funds.
Funds featured in TILL:
- The Teucrium Corn Fund (CORN)
- The Teucrium Wheat Fund (WEAT)
- The Teucrium Soybean Fund (SOYB)
- The Teucrium Sugar Fund (CANE)
Another fund to consider is the Teucrium Agricultural Strategy No K-1 ETF (TILL), which provides investors with long-only futures price exposure to corn, wheat, soybeans, and sugar. One difference with TILL is that it does not issue a K-1 tax form, but rather a 1099 form.
TILL will hold one futures contract in each of the four markets (corn, wheat, soybeans, and sugar) excluding the front-month (aka spot) contract. TILL is also an actively managed fund, giving investors more dynamic exposure to the markets than that of TAGS.
For more news, information, and strategy, visit the Commodities Channel.