(Kitco News) – Commodities are often seen as a safer go-to investment than stocks during times of economic strife as they make up the base materials that fuel the engines of society, but according to Goldman Sachs, the current environment is risky for most popular commodities, and gold offers the best protection against the loss of value.
“We strongly believe in the diversifying role of commodities in investment portfolios based on several structural drivers, including commodities’ hedging role against supply disruptions, not an uncommon occurrence in energy, and the potential for sharp rallies in select industrial metals driven by a combination of long supply cycles and structural green metals demand growth associated with energy security and decarbonization investment,” analysts at Goldman Sachs wrote in their recent commodities update.
“However, given the current softening cyclical environment, we opt to tactically close our 2024 Deficits Basket trading recommendation with a potential gain of 8% and focus on our highest conviction views in the current environment, namely higher implied oil volatility, long gold and short long-dated European gas,” they added.
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