Home Commodities Commodities Remain A Good Bet For Investors, Strategist Says

Commodities Remain A Good Bet For Investors, Strategist Says


Commodities are going to remain strong and a good bet for investors as an alternative to equities and bonds, according to Robert Minter, director of ETF investment strategy for abrdn, a national investment management firm.

Metals, energy and agriculture will be in demand in coming years, even as inflation continues to put pressure on consumers’ budgets, Minter said in an interview.

“There is a disconnect from our point of view between the central banks of the world, including the United States Federal Reserve Bank, which are raising interest rates to slow the economy and bring inflation under control, and the limits that exist on how fast and how far they can go in that effort,” Minter said. “There are constraints on how much the central banks can move.”

However, slowing of the economy does not mean it is a bad market for commodities, he said. In fact, the opposite is true, he said.

Oil will continue to be a good investment, but investors must look at the overall oil market, not just pieces of it, Minter added. “The U.S. has not opened a new refinery for decades, some refineries in Europe are offline, and there are strikes at others,” he said.

The crisis in energy prices has brought to the forefront the need for redundancy in the system, making energy investments still advantageous for a portfolio, he said.

There is also a scarcity building in other energy commodities, such as natural gas, he said. The natural gas shortage is already very severe in Europe and scarcity means the commodity is more valuable.

The commodities markets are interconnected. For instance, the production of aluminum requires a lot of energy, which makes it expensive to produce right now, Minter said. Inventory for aluminum is almost at an all-time low, making it a good investment. “It is a horse race between the constrictions on supply that are already in the market” and the need for the commodity,” he said.

“We also like industrial metals because they are always needed,” he added. Electric vehicles are going to become more expensive to produce, but “a year or two from now there will be more electric vehicles on the road—you can’t stop it.”

Copper is a good bet because it is needed for electric vehicles and wind turbines, he said. Likewise, zinc is a necessity for extending the life of steel and nickel is used in batteries, making them all good commodities to invest in, Minter said.

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