VanEck CEO Jan van Eck believes that investors should consider commodities due to a “big change” involving international expansion. He points to the world economy beginning to grow again, with China, as the second-largest economy, playing a key role in driving this expansion. The manufacturing Purchasing Managers’ Index (PMI) in China turned positive in March, signaling growth and leading to what van Eck describes as a “reflation trade.” His firm has exposure to commodities such as gold, energy, and copper through exchange-traded funds like the VanEck Gold Miners ETF (GDX) and VanEck Oil Refiners ETF (CRAK), which have seen gains of 10% and 9% respectively year to date.
Van Eck highlights the momentum in copper prices as a positive indicator of demand, with the industrial metal seeing a nearly 16% increase so far this year. He sees copper as a good measure of global economic growth and energy prices, which reflect the growth in the world economy. Additionally, he views U.S. government spending as a bullish catalyst for the commodities trade, with high levels of fiscal spending contributing to the global growth trend. He believes that commodities offer more than just a headline response to economic trends, making them an attractive investment option.
The S&P GSCI Index Spot, which tracks commodities ranging from crude oil to cocoa, has seen a 10% increase so far this year as of Friday’s close. This index reflects the overall positive trend in commodities, driven by factors such as growing demand for industrial metals like copper and the impact of global economic expansion. Van Eck’s focus on commodities is based on the belief that this sector offers a unique opportunity for investors to capitalize on the changing economic landscape, with factors like China’s growth and U.S. government spending playing key roles in driving commodity prices higher.
Investors looking to diversify their portfolios and benefit from the current economic trends may find commodities to be a compelling option, according to van Eck. The positive performance of commodity-based exchange-traded funds like GDX and CRAK, as well as the overall uptrend in the S&P GSCI Index Spot, indicate the potential for sustained growth in this sector. With global economic growth and increased demand for commodities driving prices higher, now may be a favorable time for investors to consider adding commodities to their investment portfolios as a way to capitalize on the changing economic landscape and the opportunities it presents.
