Goldman Sachs is forecasting an 18.2% return from commodities in the next 12 months with industrial metals and energy leading the way. One expert stated, "we continue to see an overweight in commodities as a hedge against the risk of the impact of sharply higher commodity prices."
By Claudia Carpenter
Sep 24, 2012 2:57 AM MT
Goldman Sachs Group Inc. forecasts an 18.2 percent return from commodities in the next 12 months, with energy and industrial metals leading the way.
The Standard & Poor’s GSCI Enhanced Commodity Index gain will include 26.5 percent for energy, 10 percent for industrial metals and 6 percent for precious metals, Jeffrey Currie, an analyst at Goldman Sachs, said in a Sept. 21 report. In three months, the gauge will be up 8.6 percent, beating equities, 10- year government and five-year corporate bonds, cash and the euro and yen against the dollar, according to the report.
“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,” Currie said.
The S&P GSCI Enhanced gauge advanced 19 percent since June 21 on speculation that China will act to bolster its economy after the U.S., Japan and the European Central Bank took steps to boost growth. Copper prices will be higher in the first half of 2013 on growth in China’s construction and the third round of quantitative easing by the Federal Reserve, Currie said.
Sanctions against Iran have limited oil supplies and global economic growth is strong enough that overall output may stay short of demand in the second half this year, according to Goldman. Oil in New York climbed 14 percent in the past year.
The 18.2 percent return for the GSCI in 12 months would lag behind a 32.8 percent jump forecast for the Tokyo Stock Exchange Topix and 25.5 percent jump in Stoxx equity index, according to the report. The S&P 500 Index of shares will be down 10.4 percent in three months and 5.4 percent lower in a year, Goldman Sachs said.
In commodities, agriculture will be down 5 percent in 12 months and livestock up 4.5 percent, Goldman Sachs said.
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