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In this environment, commodities could perform well as an asset class, with more growth-sensitive commodities such as base metals and the white precious metals having the potential to perform most strongly.

06 Dec 2012

LONDON (Commodity Online): An 'Outlook 2013' by ETF Securities (USA) states that the global economy is recovering from slow down and will return to its track by proving its potential to grow in 2013.

Increasing signs of improving global growth and continued strong central bank commitment to highly accommodative monetary policy indicates that the first part of next year has the potential to be a good one for cyclical and risky assets.

In this environment, commodities could perform well as an asset class, with more growth-sensitive commodities such as base metals and the white precious metals having the potential to perform most strongly. Within equities, basic resources and mining companies could outperform.

Commodity currencies such as the Australian, New Zealand and Canadian dollars may rise in this environment and, barring a major sovereign debt-related accident, the Euro should benefit. Conversely, funding currencies such as the Japanese yen and the US dollar may come under pressure – points ETF Outlook.

The three key risks to this benign global scenario are a sharp rebound in sovereign risk in Europe – Greece and Spain in particular, the US fiscal cliff issue and possible US sovereign downgrade and further political and military deterioration in the Middle East. Long gold, oil and volatility positions are potential hedges against these risks.


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