At present, however, Blaknfein’s words have occurred. Commodities are rising sharply and financial institutions such as Goldman Sachs, Bank of America or Ospraie Mnagement. Specifically, Goldman Sachs experts said at the end of the year that the profits at the time were only the beginning of a “much longer growth market”.
This is due to huge stimuli from governments and central banks and the advent of the vaccine, which could kick-start the global economy, which has been badly marred by a coronavirus pandemic.
Commodities have not been more popular with investors since the middle of the first decade of this millennium. At the time, China was building stadiums for the Olympic Games and stockpiling virtually everything from copper to cotton, with crops declining and export bans driving food prices up.
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The present looks similar. Prices of iron ore, silver, soybeans and, for example, gold, for example, have been rising sharply in recent months. According to The Bloomberg Commodity Spot Index, commodities are already the most expensive since mid-2014.
“The price of corn is the highest since 2014,” said Boris Tomčiak, an analyst at Finlord.cz. At the same time, after the brutal spring slump, oil and gas prices have recovered and electricity is also rising.
Commodities are being pushed up by hopes for a global economic recovery coupled with a vaccine, support from the world’s central banks led by the US Fed, but also strong demand from China and bad weather, making agricultural production more expensive.
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“The whole world is now looking at the commodity market,” Heber Cardoso of HedgePoint Global Markets told Bloomberg. This is also helped by the environment of negative rates and trillions of dollars pumped into the economies of the world’s largest central banks.
Therefore, speculators, including the sharpest ones, threw themselves into commodities. Predatory hedge fund bets on rising commodity prices are close to a ten-year high at $ 120 billion.
A similar development was expected by Blankfein when he introduced him to the visitors of the virtual conference organized by the CME Group commodity exchange in September last year. “I don’t think investing in raw materials, when they are undervalued, is a bad thing at all,” Blankfein said, adding: “Everyone has decided not to have inflationary pressures again, the price of oil will never go up, but I don’t think so.” In addition, rising prices are helped by the weakening of the US dollar, which may still continue due to huge government interventions.
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