Investors have been encouraged by the global investment bank Goldman Sachs to purchase commodities at the current time and worry about the possibility of a recession later. According to the research conducted by this company’s analysts, commodities are “the ideal asset class to purchase during a late-cycle phase where demand remains above supply.” In the meantime, according to Goldman, “equities could suffer as inflation stays elevated and the Fed is more likely to surprise on the hawkish side.”
The recommendation of Goldman Sachs is to purchase commodities at the current time.
The international investment banking firm Goldman Sachs has suggested that clients purchase commodities. Goldman wrote the following in a note that was released on Monday and headlined “Buy commodities now, worry about the recession later.” The report stated that “Our analysts assess the chance of a recession outside Europe in the next 12 months as reasonably low.” The following is an explanation provided by the company’s analysts, who include Sabine Schels, Jeffrey Currie, and Damien Courvalin: Jerome Powell, chairman of the Federal Reserve in the United States, made the following statement last week: “We are taking forceful and swift efforts to lower demand so that it comes into better alignment with supply, and to keep inflation expectations anchored.” We are not going to stop working on it until we are absolutely certain that the task has been completed. In addition, Isabel Schnabel, a member of the board of directors of the European Central Bank (ECB), stated on Saturday that the world’s central banks face the possibility of losing the public’s trust and that they must now take decisive action to combat inflation, even if doing so drags their economies into a recession.
The Goldman Sachs analysts went on to say that “From a cross-asset perspective, equities could suffer as inflation stays elevated and the Fed is more likely to surprise on the hawkish side.” They elaborated as follows on this point: “[I]f inflation stays elevated and the Fed is more likely to surprise on the hawkish side, then equity markets could suffer.”
In addition, Goldman Sachs issued the following warning: “We do recognise that the macro landscape remains tough and that the U.S. dollar could increase more in the short term.”
Recessions, in the opinion of Currie, who heads up the commodities research department at Goldman Sachs, are a natural and unavoidable feature of a lengthy commodity supercycle. In November of the previous year, he stated to Reuters that “we foresee a structural bull market in commodities,” which is quite similar to what the market experienced in the 2000s or the 1970s.
In an interview with CNBC in June, the expert stated that we are at the beginning of a commodities supercycle. It’s not just oil and gas; it’s metals, mining, and agricultural, too, because the sector has suffered from underinvestment for more than a decade, according to his opinion. “This is the opening innings of a commodities supercycle,” he stated. “It’s not just oil and gas.”