https://www.miningweekly.com

Gundlach says commodities set to outperform in late-cycle boom

10th January 2018

By: Bloomberg

  

Font size: - +

LOS ANGELES – Jeffrey Gundlach, the billionaire bond manager, said commodities may be one of the best investments this year as they surge during the late phase of the economic cycle.

“I think commodities will outperform in 2018,” Gundlach said during his annual ‘Just Markets’ webcast on Tuesday, in which he gives his outlook for the coming year.

“Commodities always rally sharply – much more sharply than they have so far – late in the business cycle as we lead into a recession.”

Gundlach presented a chart that showed the correlation between recessions and commodity prices, which tend to rise late in economic cycles dating back to the 1970s.

“In front of each one, commodities rallied a huge amount,” said Gundlach, chief investment officer at Los Angeles-based DoubleLine Capital LP, which oversaw assets of about $119 billion at year-end. Investors shouldn’t buy specific commodities, but rather a broad basket, he said.

His thoughts on commodities echo Goldman Sachs Group, which last month said raw materials will bring better returns than other assets in the long run on strong global demand, and reiterated its 12-month overweight recommendation. The Bloomberg Commodity Index of 22 raw materials has climbed about 11% since the second half of June.

Crude oil is trading at the highest in more than three years as the Organisation of Petroleum Exporting Countries and its allies trim supply to drain a global glut. Prices of industrial metals including aluminium, zinc and copper have soared on the back of supply constraints and sustained demand. Spot palladium is set to break a record as it trades near prices last seen in 2001.

Edited by Bloomberg

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION