One day after veteran commodities strategist Jeff Currie told investors to "get long and buckle up" for the next leg of the commodities rally, UBS strategist Sagar Khandelwal issued a similarly bullish call, urging clients to "position for a commodity upcycle."
Khandelwal said electrification, surging power demand, artificial-intelligence infrastructure spending, persistent supply constraints, and years of underinvestment are converging to create a perfect storm for a sustained upcycle in hard assets.
Commodities can generate returns while protecting portfolios against energy disruptions and renewed inflation, he said. That defensive role becomes valuable when the toxic mixture starts hitting stocks and bonds.
Here's how the UBS strategist framed the trade:
Position for commodity upside
We believe commodities can provide both a structural source of return and portfolio protection in scenarios where higher inflation expectations challenge equities and bonds. While commodities have historically offered valuable diversification benefits due to their relatively low correlation with traditional asset classes, we also see a supportive longer-term backdrop driven by electrification, rising power demand, AI infrastructure investment, and supply constraints across several markets. In our view, investors should maintain diversified exposure across precious metals, energy, industrial metals, and agriculture to capture a broad range of opportunities. Given fast-shifting leadership within commodity markets, we think an actively managed approach can help investors navigate the commodity upcyc
