Live on Bloomberg TV

00:00TOM: THANK YOU SO MUCH. JEFF CURRIE WITH US AND TROY GAYESKI AS WELL. THE COMMODITY SUPER CYCLE, EVERYBODY IS WAITING FOR IT TO COME BACK. WHERE IS THE RECOVERY OF THE SUPER CYCLE? TROY: WE HAVE SEEN A DROP IN LONG CYCLE INVESTMENT ACROSS THE ECONOMY. CHINA OVERBUILT THE PREVIOUS DECADE PLUS THE RETURNS HAVE BEEN POOR AND UNCERTAINTY. I ATTRIBUTE A LOT OF THE MYTHS IN THE SURVEY DATA BECAUSE WE DO NOT MAKE LONG CYCLE INVESTMENT. I THINK THE KEY POINT THERE IS YOU HAVE A BIG STRUCTURAL STORY. IT MAY TAKE US FIVE PLUS YEARS TO HIT IT. IN THE MEANTIME, YOU HAVE A TACTICAL STORY. YOU GET THE LOW END, LONG, HIGH END, SELDOM. TOM: THIS IS THE GREAT COMMODITY DEFLATION GOING BACK 20 YEARS. THERE IS SQUISHING US TO THE MATH. THIS IS A BLOOMBERG AND STARTING AFTER 2007, DOWN WE GO. HOW DO YOU MAKE MONEY OFF THAT CHART WHEN YOU HAVE INSTITUTIONAL DISINFLATION ? HOW DOES TROY GAYESKI SURVIVE? TROY: TRADE OIL, DO NOT TRADE NON-ENERGY. THAT SPACE HAS A LONG DURATION, IT IS THINGS LIKE COPPER, IT IS GOING TO TAKE A LONGTIME TIME TO EAT THROUGH THAT CAPACITY. YOU HAVE A STRUCTURAL DECLINE IN CHINA. LET ' S GO BACK TO THAT POINT ABOUT TRADING THE TRADING RANGE. I DO THINK THERE IS OPPORTUNITY. WE COULD SEE IT IN COPPER. YOU GET DOWN TO THAT RANGE WE ARE IN NOW. YOU TRADED UP. WE ARE NOT GOING BACK TO 11,000 LIKE WE WERE. TROY: THE BIG PICTURE IS SUPER CYCLES ARE CALLED SUPER CYCLES FOR A REASON. YOU NEED TO OF UNDERINVESTMENT AND A BIG DEMAND SHOCK LIKE IN THE LATE 1990 ' S, EARLY 2000 ' S FROM CHINESE GROWTH. AFTER THE SUPER CYCLE COLLAPSE, IT IS UNLIKELY WE GET ANOTHER ONE IN THE NEXT FIVE OR 10 YEARS. FRANCINE: IF YOU LOOK AT THE U.S. CHINA TRADE TENSIONS, HOW DOES THAT IMPACT THE COMMODITY? IS IT JUST THE FUNDAMENTALS OR SENTIMENT WHICH IS HURTING PEOPLE FROM BUILDING THINGS IN CHINA? JEFF: IT IS MORE SENTIMENT. IF YOU THINK ABOUT THE TRADE WAR, I LIKE TO CALL THAT THE CYCLICAL COMPONENT OF THE UNCERTAINTY WITH CHINA. A LOT OF IT HAS TO DO WITH A SHIFT IN THE POLICY IN CHINA TOWARDS ONE OF SELECTIVE EASING. PEOPLE DO NOT KNOW WHAT TO MAKE OF IT NOW. THAT LEVEL OF UNCERTAINTY IS STRUCTURAL AND IT IS IMPACTING THE WILLINGNESS OF CONSUMERS TO MAKE LARGE-SCALE INVESTMENTS ON A LONGER-TERM BASIS. IT GOES BACK TO THE POINT TO HIM WAS ASKING, WE HAVE A DROP IN INVESTMENT. IT IS GOING TO IMPACT THE MARKET FURTHER OUT. THE SITUATION CREATES A HIGHER LEVEL OF POLITICAL AND ECONOMIC UNCERTAINTY THERE REDUCES OVERALL SUPPLY IN INVESTMENT GOING FORWARD. FRANCINE: WHAT IS YOUR FAVORITE PLAY IN COMMODITIES? JEFF: LONG GOLD. WE BELIEVE THAT THE WORLD IS OK RIGHT NOW. RECESSIONARY FEARS REMAIN HIGH. THAT IS INCREASING THE PHYSICAL DEMAND FOR GOLD. WEALTHY EFFECT IS BETTER FOR GOLD AND THE CENTRAL BANKS ARE BUYING. INDIA BOUGHT 70 TONS LAST YEAR. CHINA STARTED REENTERING THE MARKET LAST YEAR. OUR TARGET IS 1450.

No schedule data available.

Goldman's Currie Likes Long Gold as Favorite Commodity Play Right Now

Jeffrey Currie, head of commodities research at Goldman Sachs, examines the gold, oil, and non-energy commodities markets. He speaks on "Bloomberg Surveillance." (Source: Bloomberg)

More From Bloomberg Surveillance
All episodes and clips

Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
More episodes and clips