Investors ought to think about commodities on account of a “big change” involving worldwide enlargement, in response to VanEck CEO Jan van Eck.
“The world economy started growing again,” van Eck advised CNBC’s “ETF Edge” this week.
He singles out China, the world’s second-largest economy behind the U.S., as a key driver in the enlargement.
“China which has been such a huge driver of growth and so negative for growth over the last year or two. Manufacturing PMI is now positive in China as of March,” mentioned van Eck. “You now have growth. … So, that results in your reflation trade.”
His agency has publicity to commodities from gold to power to copper. Its exchange-traded funds embody the VanEck Gold Miners ETF (GDX) and VanEck Oil Refiners ETF (CRAK). They’re up 10% and 9%, respectively, yr thus far.
Van Eck highlights copper‘s momentum as a optimistic signal for demand. The industrial steel is up virtually 16% this yr, as of Friday’s shut.
“It’s a good measure of global economic growth and energy prices. [They] probably have gotten a little bit ahead of themselves, but they’re reflecting the world is growing,” he mentioned.
He additionally sees U.S. authorities spending as bullish catalyst for the commodities commerce.
“Fiscal spending is running so super high,” van Eck mentioned. “That’s leading to this global growth trade, too. So, that’s why I like commodities because I think it’s more than just a headline.”
As of Friday’s shut, the S&P GSCI Index Spot, which tracks commodities from crude oil to cocoa, is up 10% to this point this yr.