No better time to get back into commodities than right now - Analyst

There’s no better time to get back into commodities than right now, says Wells Capital’s chief investment strategist Jim Paulson.

He disagrees with the opinion shared by some analysts right now that the bottom will keep falling out of commodity prices and the dollar will keep rising.

Paulson believes recent volatility in the U.S. commodity markets possibly represents "a normal (and highly emotional) bottoming process after a severe decline last year, rather than increasing evidence of a global slowdown,” notably in China.

“Likewise, we think the U.S. dollar is probably in a peaking process.”

If Paulson is correct, that could cause massive financial turbulence, since many portfolios will need to be adjusted. And the Federal Reserve will need to adjust its strategy too.

What should market players do?

The analyst believes markets now experience a late stage of a selling climax in commodities and commodity-related securities. Investors had better take advantage of the recent fall and increase their exposure to commodities and related stocks, as well as to commodity-biased stock markets such as Canada, Australia or New Zealand.

Emerging market economies will do better once the U.S. dollar hits its peak, renewing some strength in commodity prices, says Paulson.