Commodities are not a good investment over the long term because of man's ingenuity in discovering new ways to use existing resources or new technologies to replace depleting ones, according to Dylan Grice, a research analyst at Societe Generale.
The long-term return on commodities since the 1870s has been zero as "the history of our species has been one of adaptability and innovation, and I argued that to buy commodities was to short human ingenuity," Grice wrote in a market note.
One exception to this rule is gold , which is "not like other commodities, and other commodities are not like gold," he wrote.
Despite mankind's ability to adapt and invent new materials and make use of new resources, humans seem "hopelessly incapable of learning past wisdom and apparently doomed to repeat past follies," Grice explained.
Inflation has happened in the past, with "the same two villains" guilty every time: governments under financial pressure and money printing for political reasons, and "we're set to reacquaint ourselves with those villains in the flesh," he wrote.
"Shorting mankind's ability to absorb wisdom… well, aren't you silly if you don't?" Grice wrote. "With less of the technological risk you're taking when you buy any other part of the commodities complex, gold is the oldest, purest and simplest way."