BUSINESS MAVERICK OP-ED: From unloved to much loved: Commodities regain their place in the sun

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Commodities are notorious for their ability to do a complete about-turn and make fortunes for investors that didn’t give up on the sector. After almost a decade of being out of favour, a broad rally in the sector last year has prompted predictions of another supercycle akin to the almost decade-long rally in the 2000s.

A buoyant start to the new year after a bumper 2020 for all but energy commodities has, some say, laid the ground for a commodity supercycle after almost a decade during which the sector has been unloved and left out in the cold.

Palladium pipped gold to the post during a year when you would have assumed the unparalleled volatility and uncertainty would have seen the world’s traditional safe-haven asset take pride of place. The gold price did, however, break through the $2,000 per ounce level in August and it managed to put in its best annual gain in a decade.At the other end of the spectrum, oil prices and coal felt the acutest impact of the sudden stop in economies as the pandemic hit countries around the world.

On mounting speculation that the world is at the beginning of a new supercycle in commodities, Goldman Sachs is confident that there will be a new commodity bull market that rivals the boom in the 2000s, driven by massive Chinese infrastructure investment, as well as the oil price spikes in the 1970s.the market may need a period of short-term consolidation after its rapid buildup.

 

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