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According to Goldman Sachs analysts, a bullish market is on the horizon as commodities face a
supply deficit on the back of a drop in capital expenditures. And as the dollar weakens with further
stimulus measures; the idea of a bullish commodity market is now more likely to occur. But this is not
new news, commodities have been going bull since the start of the recession.
Gold was at $1,520/oz at the start of 2020, now it’s hovering around the $1,900/oz mark. This
marker has been the strongest signal for insecurities outside of the commodity markets. It was evident
that others would follow, the prices of raw building materials have gone up as supply now cannot keep
up with demand; along with the production of said raw building materials. For example, lumber futures hit
their low for the year in April but hit their all-time high in September. This was due to production being
cut and layoffs in the lumber industry followed by a sudden boom in housing development. Please see
our previous article on the matter if you would like to learn more.
Trends like this will continue within the commodities as capital expenditures in production and
maintenance of raw goods lowers and plateaus; this, coupled with the rising fears of inflation due to
talks of stimulus package announcements and tentative stability in foreign investor confidence within the
dollar. It was time to diversify your portfolios in March and it continues to be so, investing in derivatives
such as those derived from commodities is a good way to get started in diversifying your portfolio. As of
June 2019, the total value of the derivatives market was tracked at $640 billion. And with the current
market as it is right now along with the Goldman Sachs’ analysts’ predictions, we could predict that value
will rise from here on through 2021.
Rear view of man gesturing with hand while standing against defocused group of people sitting at the chairs in front of him
Commodities and other derivatives are great, but also getting your foot in the door with
investment properties is a good way to keep cash flow coming. Setting up strategic businesses that will
start out strong and continue to do so in the COVID-19 market is key to coming out on top. Even
purchasing a home right now can be fruitful; some may or may not think so as the housing market is
teetering in different directions depending on the area. However, purchasing an investment property
right now can help you get your cycle of cashflow going. Where you purchase, refurbish, rent, refinance,
and then repeat the process all over again to increase the size of your budding real estate empire. One
could even hedge the dollar by purchasing more property. By purchasing property before an expected
increase in inflation, you set your property up for an increase in “value.” The property is essentially the
same value as before the inflationary event but is now worth more in dollars; making the property prime
for cash-out refinancing.
Contact us today at Lee-Chandler Enterprises to set up a meeting with one of our analyst teams
in order to get you started on your real estate journey, and to keep your money protected from the Fed.
https://www.marketwatch.com/story/why-goldman-sachs-sees-a-2021-bull-market-for-commodities-
11603384167?mod=home-page
https://www.bis.org/publ/otc_hy1911.htm
Anthony Kardous
Analyst
phone: 317-559-7507
email: [email protected]
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