Goldman Sachs: Commodities Offer Superior Protection in Inflationary Times

Goldman Sachs Research highlights commodities as a robust hedge against inflation, outperforming stocks and bonds during inflationary periods. A 1 percentage point surprise increase in US inflation typically results in a 7 percentage point real return gain for commodities, while stocks and bonds decline by 3 and 4 percentage points, respectively. Commodities provide protection against negative supply shocks and lower stock returns due to rising prices and slowing GDP growth. Historical analysis of five inflationary periods over the past 50 years shows that commodities consistently outperformed equities and bonds, regardless of the inflation drivers.