Goldman Sachs Sees Opportunity In Commodities, But The Greatest Long-Term Gains Likely In Farmland

Last week, Federal Reserve Chairman Jerome Powell swayed the market again after making remarks about inflation. Powell confirmed that lowering inflation would be a costly fight in terms of jobs and economic growth.

The blunt message may be ominous, but the honesty could be interpreted as refreshing. Powell shared that the Fed’s “overarching focus right now is to bring inflation back down to our 2% goal.” Powell later provided some context on how that might be possible. About a potential 0.75% raise in interest rates, Powell said that “another unusually large increase could be appropriate.”

Other noteworthy quotes include “History shows that the employment costs of bringing down inflation are likely to increase with delay, as high inflation becomes more entrenched in wage and price setting.” He added that “there is clearly a job to do in moderating demand to better align with supply. We are committed to doing that job.”

You may be wondering — if the jobs, housing and the stock market are all headed in ugly directions, is anything safe? 

Goldman Sachs Group Inc. thinks so. It is urging investors to consider investing in things like oil, petroleum products, aluminum, wheat, corn and sugar. It says that the recession risks faced by global markets face are overblown in the near term. Goldman predicts that the U.S. and China will be able to avoid a recession and that a recession would be largely confined to Europe.

Goldman has raised its forecast for the entirety of the S&P GSCI commodity index on a 12-month basis to 38.8%. Energy was the highest at 51.7%. However, there is something more to be learned from its projections.

It may be worth noting that the only sector without negative performance (historical or forecasted) is agriculture. It’s telling that during one of the most tumultuous times in recent American economic history, agriculture has held strong. 

You could consider investing in agriculture in another way, outside of the stock market. Recession or not, farmland could be a way to grow your money in the long term. If you’re not willing to invest in a farmland REIT like Farmland Partners Inc. FPI, you could consider a fractional ownership method, like AcreTrader.

AcreTrader boasts historical returns of 15.4% to 30.3%. With minimum investments starting around $15,000, you can become a part of the trend, owning fractional shares of actual parcels of farmland. Farmland is one of the fastest growing asset classes for good reason, and if you peek behind the curtain a bit, Goldman Sachs just hinted at the same thing.

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