Here’s Why Goldman Sachs Says Buy Commodities Now

Central Bank Policies vs Inflation

In fact, it’s becoming more evident, day by day, that Central banks across the world are fighting a losing battle against rapidly surging inflation and no matter what actions they take now, it will be nowhere enough to tame ever-rising inflationary pressures.

For the first time in history, every major central bank from the U.S Federal Reserve, ECB to the Bank of England have come together in a global effort to engineer their most aggressive monetary tightening cycle since the early 1980s.

And so far, those efforts have hardly made a dent on inflation.

This week, the European Central Bank officially became the latest major bank to join the “Super-Sized Rate Hike Club” – following in the footsteps of the Fed and Bank of England by announcing their very own 75-basis-point interest rate hike.

The ECB has lagged behind most major central banks in its response to record high inflation. The U.S Federal Reserve is widely expected to announce a third consecutive 75-basis-point rate hike later this month and the Bank of England may not be that far behind, with a similar magnitude move.

Forecasts suggest that the global inflation will likely get worse before it gets better. Even Fed Chairman Jerome Powell warned of “significantly higher” inflation to come this year, during his recent speech at the Jackson Hole Economic Summit.

The Commodity Prices and Inflation Correlation

As traders very well know – there is a strong correlation between inflation and Commodity Prices. When inflation accelerates at a red-hot pace, so does the prices of Commodities.

Since the beginning of last year, everyone from Goldman Sachs to Bank of America predicted the start of a new Commodities Supercycle – And they definitely called it spot on!

Historically, Commodity Supercycles move in “very predictable” phases, which can last up to a decade. These phases typically include an explosive rally, consolidation and then another explosive rally, consolidation – followed by yes, you guessed it – yet another explosive rally!

Earlier this year, a total of 27 Commodities ranging from the metals, energies to soft commodities blasted through all-time record highs – since then prices have been in consolidation phase.

Are Commodity Prices Going to Explode?

The big question now is, our we on the verge of the next big “explosive rally” in Commodity prices?

Goldman Sachs definitely seems to think so.

In recent days, Goldman Sachs put out a note urging traders to pile back into commodities, arguing that sector stand to rebound amid a profound backdrop of fundamentals ranging from the Global Energy Crisis to historically tight physical supplies.

If the first leg of the Commodities Supercycle is anything to go by, then we could definitely be in for a real big treat ahead.

To quote Warren Buffett, “the Commodity markets right now, represent one of the greatest generational opportunities of our lifetime, not to be missed” – and I fully agree!

Commodity Price Forecast Video for September 9, 2022

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: