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Ready to bet on base metals for the next five years: Jonathan Barratt

Base metals to me is probably one of the greater opportunities and so is the precious metal sector. Some of these commodities are available at a very low price now. Some of those base metal prices are very low and the inventories are also very low. I am looking forward to a good rally, particularly in the base metal sector.

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Last Updated: Dec 13, 2019, 02.42 PM IST|Original: Dec 13, 2019, 02.34 PM IST
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Base metals to me is probably one of the greater opportunities and so is the precious metal sector, says Jonathan Barratt, CIO, Probis Securities. Excerpts from an interview with ETNOW.

Two days ago, did you think that the American and Chinese would be using the word truce?
We all know that at the end of the day, the deal had to be done. One of the most frustrating things was the fact that it was prolonged and the commodity prices suffered. But at the end of the day, they are the two of the largest economies. A deal has to be done because the tariffs at the end of the day will hurt consumers and will certainly hurt demand. This will only be the phase one of many deals. But it is a sure sign that hopefully some of the commodity prices would be shored up
.
We have seen that even the hint of a progress has sent global markets spiralling up, do you think then that this is likely to remain a trend for the US markets given that now we have some sort of certainty on this front?
The US equity markets sort of have a problem at these levels. I am going to focus more on the commodity market. It is a very bright sector. The entry levels to a lot of these commodities is very low. But at the end of the day. US equity markets are at record highs. We are not moving on we are just stagnant here at the moment, will positive trade outcome see prices go higher, I am a little bit nervous of equities and have been for a while opting for the commodity sector.
I am going to focus more on the commodity market. It is a very bright sector. The entry levels to a lot of these commodities is very low.

-Jonathan Barratt


Industrial metal capex is low right now do you see any larger supply deficit coming in? What would be the key factors for a rebound?
The inventories are very low. Capex has been low for some time and that will start to come back. Quite a few projects have been shelved over the last couple of years and that has caused the inventory levels, particularly on base metals to get to very low levels. Once you get those trigger points, you will see a resounding bounce. When you look at how low inventory levels are, especially in copper, if any form of positiveness comes to the frame, there would be more of a squeeze. There are some good opportunities out there in the commodity space.

If you have to bet on one asset class in the next five years, what would it be?
I like the base metals. They seem to be some of the best ones. Base metals to me is probably one of the greater opportunities and so is the precious metal sector. I find equities too high. Bonds seem to have had their day for some time. But five years is a long time. Some of these commodities are at a very low price. Some of those base metal prices are very low and the inventories are also very low. I am looking forward to a good rally, particularly in the base metal sector.

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