A bullish report: Goldman Sachs says it’s time to go long commodities
- January 1, 2024: Vol. 11, Number 1

A bullish report: Goldman Sachs says it’s time to go long commodities

by Frank Holmes

In a new report, Goldman Sachs makes the case that natural resources are poised to increase in value in 2024 on a potential end to the current monetary tightening cycle, shrinking recession fears, hedging against geopolitical risks and demand for “green energy” metals such as copper and aluminum, among other drivers.

Goldman forecasts that the S&P GSCI Index — which tracks 24 different commodity futures contracts, with an oversize oil weighting — could end 2024 with a 12-month return of 21 percent.

That would be a welcome reversal from commodities’ mostly dismal performance in 2023, despite intermittent strength from gold and crude oil.

Among the more compelling points Goldman analysts make is the diminishing effect of monetary policy on real gross domestic product (GDP) growth in the United States and Europe.

The Federal Reserve has hiked rates at an unprecedented pace this cycle to slow the U.S. economy and tamp down consumer prices, and a recent consumer price index report by the Bureau of Labor Statistics suggests that these efforts may be working. Inflation rose at an annual rate of 3.2 percent in October, down from 3.7 percent in September and significantly down from the cycle high of 9.0 percent, set in June 2022.

Continued disinflation implies that the Fed and European Central Bank are done hiking rates, in Goldman’s view, which it believes will support demand for commodities.

Clean energy production is another contributor to potentially higher commodity prices in 2024. An average-size electric vehicle, for example, requires six to seven times more metals and minerals than a conventional car of similar size. Whereas an EV uses around 440 pounds, a gas-powered car uses about 66 pounds.

Likewise, constructing an offshore wind plant requires 13 times more minerals than building a similarly sized gas-fired power plant. This underscores the significant resource intensity associated with clean-energy projects.

It’s not just quantity that matters, though, but also the variety of materials needed. Household-name metals such as cobalt, lithium and nickel often appear in headlines, but lesser-known minerals such as graphite play an equally crucial role. In terms of battery composition, graphite accounts for roughly half of a lithium-ion battery’s weight. Lithium, on the other hand, makes up only about 8 percent to 10 percent.


Frank Holmes is CEO and CIO of U.S. Global Investors. The original version of this story appeared on the U.S. Global Investors’ website. Read it here.

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