The Goldman wake-up call: It’s time to tilt towards commodities in your portfolio – by Ian McGugan (Globe and Mail – May 5, 2018)

Goldman Sachs loves commodities. You may want to at least like them. The Wall Street investment bank argued in a research note this week that the case for owning the raw materials of the global economy has “rarely been stronger” than it is right now.

Not everyone agrees, of course. But investors fretting about stock-market turbulence and the punishing impact of rising interest rates on bond prices should take a look at the case for unloved commodities. These overlooked assets can diversify your portfolio, shield you against inflation and allow you to benefit from the late stages of a long-in-the-tooth economic recovery.

The simplest case for them is this: They’re due. While Wall Street stocks have delivered a steady stream of pleasant surprises in recent years, commodities have brought nothing but pain – at least, until the past few months.

The commodities universe, which spans everything from oil and metals to cotton and pork bellies, has been the best-performing asset class of 2018, according to Goldman Sachs. As a group, raw materials have beaten the S&P 500 by eight percentage points since the start of the year and delivered a return of 7 per cent.

They still have room to run. In nearly every case, major commodities are still trading well below the prices they fetched back in 2014, when booming Chinese demand was propelling their values into moon orbit.

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