Goldman Sachs Is Overweight Commodities, Should You Be?

By May 9, 2017Finances, Investing

Barron’s Magazine reported that Goldman Sachs is now overweight (meaning they like) commodities. Should you be?

You can read the article here.

Adding commodities to a portfolio increases diversification but is now the right time?

Goldman appears to be making a value play here because if we look at a chart of the commodity index PowerShares DB Commodity Index (Ticker: DBC) it is trading well below it’s long-term (200-day) moving average.

PowerShares DB Commodity Index ETF – 6 Month Chart with 200 Day Moving Average

To say “Overweight Commodities” is a generalization because there are many different types of commodities that you could choose from. It’s smarter to look on a case by case basis.

For instance, if we compare the PowerShares Base Metals (Ticker: DBB) to the SPDR Gold ETF (Ticker: GLD), we see that base metals are trading above their long-term average while gold is still trending down.

PowerShares DB Base Metals ETF – 1 Year Chart with 200 Day Moving Average

 

SPDR Gold Shares 1 Year Chart with 200 Day Moving Average

Regardless, I don’t take statements like, “commodities tend to beat out other asset classes in the so-called expansion phase of the business cycle i.e. when interest rates are rising” as advice because it is way too subjective.

One thing that is not subjective though, is price and trend. We can view the price action and trends within the commodity markets and make decisions on actual data, not cliche statements.

Best,

John

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Disclosure
Nothing in this article should be construed as a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Vision Wealth Partners clients. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Vision Wealth Partners assumes no responsibility for the tax consequences to any investor of any transaction. Past performance is no guarantee of future results.

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