Friday, 24th February 2006 (3272 views)

Commodities such as gold and oil are poised to bring investors better returns over the next decade than financial assets, according to one Hong Kong-based adviser.

Puru Saxena told Reuters that raw materials are in short supply at present, leading to historically high prices.

On the other hand, he explained: "Not many retail investors have even taken a position in commodities, so how can it be the end of the boom?

"When commodity prices start rising due to supply and demand imbalances, then financial assets generally tend to under-perform," he continued.

Mr Saxena now predicts that investors will need to stick with commodities for around ten to 15 years, driven by a huge surge in demand from emerging economies such as India and China.

He added that geopolitical factors, including the ongoing conflict in Iraq, would be of benefit for the gold market in particular.

 

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