Massive leverage flooded into all areas of the market before the crash of 2008. Commodities, as measured by the CRB Index, were hit especially hard as they tumbled from all-time highs back to levels seen six years prior.
Since then, copper—a reliable indicator of global economic activity—has retraced most of its losses. The price of iron ore has soared on increased demand from China.
“The financial crash took down everything, but if you take the longer-term view on commodities before the crash, we are back to where things were at in 2008,” Coxe said.
“The advantage of commodity stocks is that they are cyclical stocks historically—stocks that go up when the economic cycle is strong and that go down when the economic cycle is weak,” Coxe said.
Commodities, he said, have been “complicated by the China story, but the overall growth of Asia is well above 4% when you add all these countries together.”
With most countries around the world now experiencing positive economic growth, “maybe it’s now time to take a bet that overall demand for stuff is going to increase,” Coxe said in a telephone interview with Financial Sense Newshour.
This article is brought to you courtesy of Financial Sense.