Tuesday, September 21, 2010

Bullish on Commodities

It’s no secret that we’re long-term bullish on commodities.

Our boiled-down viewpoint: there will likely be short-term volatility in the sector, but we believe the enduring strength of the global growth story being led by China and other key emerging markets will be a powerful demand driver in the years ahead.

Some of the research crossing our desks this week seems to line up with our thesis, and it also offers some perspective in the shorter term.

Goldman Sachs forecasts crude oil rising to $85 to $95 per barrel before the end of 2010 based on rising demand from emerging markets and limited supply response. It also sees gold at $1,300 per troy ounce in the next six months, and potentially even higher if the Fed comes out with another round of quantitative easing (QE). Oil and copper could also benefit in a QE scenario, Goldman says – more money created, more spending on key commodities. (more)

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