Odd Lots Jeff Currie on the 'Volatility Trap' Keeping Commodity Prices So High
Apr 14, 2022
Jeff Currie, Goldman Sachs' global head of commodities research, shares his expertise on the ongoing commodities supercycle, which he believes is only in its early stages. He introduces the concept of a 'volatility trap' that's sidelining investments despite soaring spot commodity prices. Currie discusses the pressing need for regulatory changes to incentivize investment, the tightness in the copper market, and the challenges presented by the transition to greener energy. His insights illuminate the intricate dynamics of today’s commodity landscape.
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Long-Term Contracts
- Long-term contracts stabilize commodity markets, promoting investment.
- Governments or central banks could facilitate these contracts.
Strategic Reserve
- Governments could use strategic reserves to create long-term contracts.
- Buyback commitments at a certain price can encourage investment.
SPR Impact
- SPR releases offer temporary price relief, but crowd out private investment.
- Replenishing the SPR may take years, creating future price pressures.