Commodities are firmly on track to close the year as the best performing asset class of 2022 with everything from the metals, energies to agriculture racking up astronomical double to triple digit gains.
As we head into 2023, that trend is definitely set to continue as the Commodity Supercycle enters its next exponential phase.
According Goldman Sachs, the macroeconomic backdrop for Commodities in 2023 is looking more bullish than ever before in history – ultimately indicating that we could be on the verge of another record-setting year ahead.
In a note to clients, Goldman Sachs said that “the best place to be in 2023 is commodities” – forecasting huge gains ahead for the entire sector amid a Supercycle that has the potential to last for a decade.
The bank’s analysts wrote that “underinvestment in new capacity, economic stagflation, China’s reopening, coupled with a slowing of global central bank rate hikes, leading to the eventual end of rate hikes next year and signs of a dollar peak will power monumental gains across the entire Commodities complex”.
There is no deny that the biggest macro driver supportive of higher prices is a “Global Central Bank Monetary Policy Pivot”. 2023 should deliver the completion of one of the fastest and most aggressive tightening cycles on record, with a total of 60 central banks around the world expected to be done by the first quarter of 2023.
A harder-than-expected global economic landing would not only attract additional safe haven buying, but the rally could become supercharged by more sharper and dramatic surges in Commodity prices – if the Federal Reserve and its major central-banking peers rapidly unwind tighter fiscal policy.
The previous two Supercycles took place in the 1970s and the 2000s. In both cases, the Commodities sector resembled the identical tell-tale signs, as it’s displaying once again right now.
If history is anything to go by, then the stage is almost certainty set for commodity prices to outperform every other asset class out there for a third consecutive year running! It goes without saying, that commodities are definitely one of the hottest and most exciting asset classes to watch in 2023.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
