According to Lloyd Blankfein, former CEO of Goldman Sachs Group Inc, it’s probably a good time to invest in some commodities, whilst prices are lower.
“From an inflation point of view, as an investor, I think investing in material sectors while they’re under-appreciated is not a bad thing now,” Blankfein said at the CME Group Inc.’s virtual metals briefing. “Everyone has decided that we’ll never have inflationary pressure again, oil prices will never go up again. I don’t think so.”
It all started back in 1982 when Blankfein joined Goldman as a metals salesman, it is said he wasn’t particularly positive about precious metals, or at least was unsure of their potential. He had expressed his doubt about investing in gold and silver “because it’s been so long since those metals played a role as a store of value.”
Needless to say, he would have to eat those words decades later as Gold soared to a record at the beginning of August in 2020, going up a whopping 30%. Why do you ask? Coronavirus! The pandemic sparked a surge in the demand for haven assets. On top of that we have witnessed a number of economic stimulus from powerful establishments, including central banks globally and governments which have also raised inflation; increasing the appeal of bullion.
Since OPEC+ oil production cuts have come into place, it has decreased global inventories such as the enormous amounts of oil in floating storage. It is reported that freight rates went from over $250,000 per day for a Very Large Crude Carrier to less than $30,000 per day which has left tanker owners questioning how long until they admit defeat. A successful vaccine could be their only hope at this point.
You can forget about oil demand right now, once more because of the pandemic, and right now there is no amount of research or stats to estimate when the demand will be back. However, as always, most industries have a monopoly, knock-on effect on each other so we could assume that an economic rebound will result in more oil demand.
“The list of industries that have been hit hard by Covid-19 is long, with shipping being just one of the many casualties,” shipbroker Gibson said, sourced by Hellenic Shipping News, earlier this week.
“Although in spring tanker rates surged to unprecedented highs amid discharging delays and floating storage demand, today’s market is very different, with TCE earnings on many trades stuck at or below OPEX for a few months now.”