Goldman Sachs is enceinte the commodities sector to generate returns of almost 10 percent next year, myriad than other assets over the long run.
Robust demand swelling for raw materials worldwide should underpin the case for investors to own them, Goldman reported in a research note published Monday.
Jeffrey Currie, global fount of commodities research at the U.S. bank, said “a positive carry in key commodity shops and already strong global demand growth across the commodity complex bolsters the case for owning commodities. And hence we maintain our 12-month overweight approbation, now with a forecasted return of almost 10 percent.”
Unlike equities, which minimize future growth, commodities rise as the current levels of demand redress the amount of available supply, according to Goldman.
The bank said it does not obviate the oil market to shift back into contango — when futures quotations for a commodity are higher than the current spot price — in 2018. Thus, a positive roll yield in oil will bring returns of around 15 percent next year, Goldman analysts asseverated. The roll yield refers to an amount gained when the futures honorarium converges to the spot price as time passes.
While Goldman demanded it had “significant divergences” regarding its views on metal commodities, its analysts were most bullish on copper and most bearish on aluminum.
“The transformation lies in the supply dynamics … While copper supply is likely to happen to increasingly constrained over the coming years, aluminum supply should enhance more abundant,” Goldman analysts said.