A new report from Investec Asset Management's commodities team has looked across the commodity spectrum to identify the winners and losers from 25 sectors in the next six months.
On the pure commodity price front, the sector the team is most positive on is natural gas, predicting its price will go 'strongly up' in the next two quarters, while the team thinks equities focused on the area will also 'trend upwards'.
On commodity equities in general, meanwhile, the Investec team headed up by Bradley George is most positive about the prospect for gold and silver equities, expecting both to go strongly up in the coming six months.
'In the near term, it does not appear that either geopolitical or sovereign risks will diminish sufficiently enough to weigh heavily on gold. We believe any further deterioration in risk, either in the Middle East or on sovereign debt issues, could propel the bullion market to new highs,' the report said. It also added that miners face a number of challenges including rising labour and materials costs, and higher fuel costs, saying: 'the inability of the global mining community to significantly increase gold production in the face of high prices is very supportive of a gold bull rally.'
Other commodities on which Investec is positive on both the raw material and the related equities are thermal coal, diamonds, copper, aluminium, wheat and fertiliser. The firm's outlook for zinc and nickel, meanwhile, is negative.
On the energy front, the firm is sticking to its long term oil forecast of $100 a barrel.
'Whilst in the short term a crude price spike towards $150 per barrel is not inconceivable, we would expect a potential price spike to be met with key OPEC members increasing oil shipments to calm the market given OPEC’s share capacity being greater than in 2008. It is important to note that as a result of the continuing political events, we are unlikely to increase our long term oil price forecast of $100 per barrel, this has always been based on costs and it is impossible to accurately forecast political risk.'
