Retail investors have not yet caught on to the hype around commodities
Institutional investors are increasingly making the case that a commodity supercycle is on the horizon, particularly where copper is concerned.
Research has revealed that 82% of German pension funds believe that demand for commodities is set to surpass supply for an extended period of time.
A particular beneficiary of this demand is copper, according to analysts at Goldman Sachs.
At the time of writing, the copper price currently stands at $9,435.60. However, Goldman Sachs suggests that the price of the red metal could get to $11,500 within the next 12 months.
The major US bank is also expecting copper to outperform gold next year, as the yellow metal continues to underperform in 2021.
Analysis by Block-Builders.net of Google search engine data suggests that most people have not caught on to the red metal’s potential as an investment.
A score of 100 on Google trend means the highest possible demand, however, relative search volume for “buy copper” stands at 24.
Therefore, the view that copper is set to enjoy a supercycle, is one of institutional investors only.
Copper continues to be useful in a variety of sectors, particularly housing, electronics and cars. The red metal is set to play an important role in the renewable energy sector too, with electric vehicles and sources of renewable energy both using copper.
Chile accounts for meeting 28% of global demand for copper. It is a country that faces political events which can significantly impact the price of copper. For example, recent strikes led to the closure of mines and price increases.
“A variety of developments are fuelling demand for copper,” according to Block-Builders analyst Raphael Lulay. “This is also making the metal more and more attractive to investors.”
Early in the year, UK Investor Magazine reported on three commodities funds which could stand to gain from a supercycle. There is a mix of passive and actively managed funds along with selections providing attractive yields.
