In recent years, commodities have attracted significant attention from investors, with gold and silver reaching record highs. This increased interest comes amid complex global challenges such as the U.S. and Venezuela situation and rising concerns over the Federal Reserve’s actions, particularly following a criminal investigation into its chair, Jerome Powell. Navigating the current commodity cycle may prove to be more intricate than traditional factors of supply and demand that have historically guided this market. In a recent discussion at the New York Stock Exchange, renowned asset management expert Jeff Gitterman shared insights on these evolving dynamics.
Jeff Gitterman, managing partner of a Gitterman Asset Management, emphasized the significant and evolving landscape of commodity investments. According to Gitterman, traditional commodity cycles, often stretching over 25 years, are underpinned by supply-demand fluctuations. However, today’s market is different, influenced by emerging themes like deglobalization, decarbonization, and de-dollarization. These factors contribute not only to price volatility but also to global security issues, reshaping how investors must approach commodities.
Gitterman proposed that the global market is currently entering a new super cycle of commodities, highlighting how ongoing global security challenges compel investors to reconsider the primary price-based evaluations they’ve long relied upon. This perspective marks a shift towards treating commodity accessibility as a strategic necessity rather than a simple market price consideration. This notion invites investors to play a more strategic game, akin to chess rather than checkers.
Throughout his discussion, Gitterman pointed out the divergence between precious metals and other commodities, noting that while metals like gold and silver are experiencing an upswing, oil remains stagnant, largely due to shifting geopolitical landscapes—such as increasing oil supply from Venezuela. As investors navigate this complex marketplace, Gitterman suggests that separating investments between precious metals, agricultural commodities, and energy products becomes imperative.
The discussion further delved into how the electrification trends and demand for various metals are fundamentally changing investment strategies. Notably, the race for artificial intelligence capabilities necessitates the expanded use of metals like copper, silver, platinum, and palladium. In this context, Gitterman highlighted the ongoing tensions with China, which controls a substantial portion of these resources, thereby complicating supply chains and impacting the strategic positioning of the U.S. market.
As Gitterman emphasized, capitalizing on this new commodity landscape requires finesse and a strategic outlook. Investors cannot afford to allocate their resources haphazardly. Instead, they should consider specialized Exchange-Traded Funds (ETFs) that focus on specific commodities rather than the traditional broad baskets. He stressed the importance of consulting with advisors who possess a nuanced understanding of this volatile market, as fluctuations can happen rapidly, even amidst a broader super cycle.
Amid the changing tides, Gitterman remained optimistic, forecasting potential increases in gold prices, suggesting they could reach $5,000 in the near future. However, he warned that volatility is becoming the norm in this marketplace, urging investors to be vigilant and responsive to latest developments rather than adhering strictly to historical trends.
The conversation with Jeff Gitterman highlighted that entering the current commodity market requires a layered approach, combining historical knowledge with an acute awareness of emerging global issues. Investors must adapt to this evolving paradigm where traditional metrics of supply and demand are less relevant, and a fresh focus on global security and strategic resources takes precedence. By staying informed and strategically engaged, investors can uncover invaluable opportunities that lie beyond conventional expectations.