When the economy recovers, metals are the winners
New Year’s is a time for predictions. As early as last year, Goldman Sachs proclaimed 2024 as the year of commodities. (We reported on this.)
Other specialists in the field of finance and investment fundamentally agree with the investment bank’s forecast. Three main areas are expected to define the investment environment for the new year: the upcoming interest rate turnaround, an associated global economic rise, and, on the other hand, geopolitical crises—the ideal mix for commodities.
Copper demand set to surge in the long term
According to the US Geological Survey, annual copper demand in 2050 is expected to be as high as the total amount of copper produced between 1900 and 2022. That is an enormous quantity. Nevertheless, last year the International Copper Study Group (ICSG) still assumed a copper surplus for 2024—a forecast that is now increasingly being questioned. Thu Lan Nguyen, commodities expert at Commerzbank, instead expects supply to tighten.
Copper demand driven by electrification
Copper is the most important metal for the energy transition. Oliver Van Haute, Head of Global Balanced Funds at DPAM, therefore assumes that copper and silver could benefit from strong demand for environmentally friendly technologies and, in particular, the global push toward net-zero targets. Platinum is also gaining importance due to its role in the production of green hydrogen.
Economic upswing and business cycle
Daniel Hartmann, Chief Economist at Bantleon, expects industrial metal prices to gain momentum only once the global economy is clearly trending upward. However, he believes this will not be the case until the end of this year. Even until then, he considers industrial metals a good investment, as structural supply deficits mean they have only limited downside potential. Paul Jackson, Global Head of Asset Allocation Research at Invesco, takes a similar view: When positioning for an environment of economic recovery and a weaker dollar, industrial metals could be well placed.
Starting the new year well with commodities
Most experts assume that the global economy will brighten due to interest rate cuts. Nevertheless, investors must also expect global economic and geopolitical uncertainties. The savings bank therefore advises its clients to focus above all on diversification, alongside risk tolerance and inflation protection. In addition to typical investment products such as equities and funds, the bank therefore also recommends real-asset investments in commodities and precious metals. The background to this recommendation is unsurprising: it is the Goldman Sachs study.