Jeff Currie Sounds The Alarm

Source: https://www.bloomberg.com/news/videos/2022-02-07/i-ve-never-seen-markets-like-this-goldman-s-currie-video

If you would like to invest in commodities, it’s worth learning a bit about Jeff Currie. The expert has been analyzing the commodities market for Goldman Sachs for several decades. Above all, Currie is known for predicting developments relatively precisely.

In 2015, for example, he predicted that oil prices would remain low for years – and was right. Recently, however, the economist has done a 180 and is now one of the biggest advocates of a bullish commodities market. This means that Currie expects price increases for almost all important resources in the coming years.

The expert had already predicted a so-called supercycle at the beginning of 2020 due to the emerging COVID-19 pandemic, the increasing shortage of raw materials and the demand from energy decarbonization. Looking at the price developments to date, Currie has once again hit the mark.

Currie: “We are out of everything”

Now the “commodity prophet” has spoken out again in an interview with Bloomberg. In short: For us commodity investors, it could also rain good money in the next few years.

In the interview, Currie emphasized that in his many years as a commodity analyst, he had never experienced a situation like the one currently prevailing on the markets. During the financial crisis at the end of the noughties, for example, there were enormous record highs in commodities, such as crude oil.

But today, the situation is completely different. There are not just isolated shortages at the moment. Rather, there is a shortage of everything – be it oil, gas, copper or aluminum. “We are out of everything” is the expert’s credo.

Stocks of Key Raw Materials in Decline

For many months now, global inventories have been falling virtually non-stop. And new supply capacities are being added only very slowly, if at all. According to Currie, there has simply been far too little investment in new production sites in recent years.

In other words, mining companies are putting far less money into exploring new raw material deposits and building new mines. At the same time, demand for commodities is recovering from the pandemic much faster than originally thought, Currie said.

The analyst expects this precarious trend to continue over the next few years. Accordingly, market prices for raw materials are likely to remain at a high level or even rise further.

Energy Transition Further Exacerbates Supply Situation

Incidentally, other well-known analysts and financial institutions such as JPMorgan also expect a commodity supercycle in the coming years. This also has to do with the energy transition.

The expansion of renewable energies, the emerging hydrogen economy and the transformation to electromobility will require gigantic quantities of metals. Among them: Silver, nickel, platinum and copper. Demand for these raw materials is therefore likely to increase in the long term, which in turn will tighten the supply situation.

Large Mining Stocks Should Benefit

As an investor, you can participate in this likely price boom. The easiest way to do this is through the large mining stocks such as BHP (BHP), Vale (VALE) and Rio Tinto (RIO). 

These groups have a well-diversified portfolio and are therefore relatively low-risk. But the best thing is that the mining companies mentioned are traditionally very generous when it comes to giving their investors a share of the profits through dividends. The bottom line is that commodity investments are looking better than they have in a long time

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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