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Tailored for investment professionals this site provides information on our products, strategies and services. Please remember capital is at risk and past performance is not a guide to the future.

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Investment views

Natural Resources Indicator

3 February 2020

Market review

The Bloomberg Commodity Index gained 4.4% in the fourth quarter of 2019. An index of industrial metals was approximately flat over the three months, but benchmarks representing energy, precious metals and agriculture all climbed higher.

The price of Brent crude rose by about 9% in the period, from just over US$60 per barrel (bl) to approximately US$66/bl. The increase came partly as leading oil-producing countries agreed to cut production, amid concern about the demand outlook should the global economy slow further and plentiful US shale supply.

Worries about the economy combined with rising tensions in the Middle East to drive gold to its fifth straight quarter of gains, bringing the price of the yellow metal to a calendar-year increase of 18%. The NYSE Arca Gold Miners Index of gold companies also delivered positive returns, rising by 10% in the fourth quarter to end 2019 up more than 41% for the year. The long-awaited surge in gold-sector M&A activity finally materialised, with nine deals agreed or proposed during the quarter.

Among other metals, the platinum group metals (platinum, palladium and rhodium) finished the year strongly, capping a year of substantial gains amid tight supply; iron ore was little changed as seasonal restocking offset weakness in steel markets; and economic-bellwether copper ended 2019 on a brighter note, partly due to a more optimistic outlook for Chinese manufacturing.

Among agricultural commodities, corn traded in a narrow range during the last three months of 2019. After a slow start to the harvest, concerns over the US crop eased towards year end as frost stayed away long enough for farmers to catch up. Prices for potash, a key input into fertilisers, ground lower throughout the fourth quarter, with production cuts insufficient to offset weaker buying.

At a glance - our asset class views

-- - o + ++ -- - o + ++
  Crude Oil  
  Natural gas  
n/a Oil services  


-- - o + ++ -- - o + ++
  Base metals & bulks  
  Iron ore  
  Coking coal  
  Thermal coal  


-- - o + ++ -- - o + ++
  Precious metals  


-- - o + ++ -- - o + ++
  Agriculture & softs  


Key themes

  • Consolidation in the gold sector looks set to continue.
  • Geopolitical tensions are clouding the oil outlook.
  • In environment sectors, 2020 could be the year of the electric car.
  • The platinum group metals may yet rise further.
  • Ample supply could cool the copper market in Q2.
The value of investments, and any income generated from them, can fall as well as rise. Past performance is not a reliable indicator of future results, losses may be made. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. This is not a buy, sell or hold recommendation for any particular security.

Views of Investec Asset Management’s Natural Resources team and reflect preferences within respective asset class. As at 31.12.19.

Important information

This material is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. All of the views expressed about the markets, securities or companies reflect the personal views of the individual fund manager (or team) named. While opinions stated are honestly held, they are not guarantees and should not be relied on. Investec Asset Management in the normal course of its activities as an international investment manager may already hold or intend to purchase or sell the stocks mentioned on behalf of its clients. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This content may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Actual results may differ materially from those stated herein. All rights reserved. Issued by Investec Asset Management, issued February 2020.

The content of this page is intended for investment professionals only and should not be relied upon by anyone else

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