Chris’ note: This week, I’ve been showing you how to turn crisis into opportunity. The media is full of scary headlines – volatile stocks, a war in Europe, spiraling energy prices, and soaring inflation. Just today, news hit that inflation is running at 7.9%. That’s the highest it’s been since 1982.
But don’t worry. Teeka Tiwari, Jeff Brown, and our other analysts here at Legacy Research have strategies you can use to protect – and even grow – your wealth through these turbulent times. And it’s my job to bring them to you.
Today, we have a Q&A with our commodities expert, Dave Forest. He just handed his readers the chance to make a 1,110% gain off rising oil prices. And below, he shares two moves you can make right now in your portfolio to turn the tables on inflation.
Q&A With Dave Forest, Editor, Strategic Investor
Chris Lowe: You’re in a country a lot of folks may not even have heard of – Uzbekistan. What brought you there and what can you report back?
Dave Forest: As your longtime readers will be aware, in addition to my work at Legacy Research, I’m a professional geologist and mining entrepreneur. I’m here checking out a copper mine and a gold mine I’m thinking of buying.
Commodities across the board have been taking off due to Russia’s war on Ukraine… and the West’s sanctions against Russia. And there are a lot of big moves in commodities markets as a result.
For instance, I’ve handed readers of our Strategic Investor advisory the chance to make a 1,110% gain on oil’s rise. In October 2020 – back when nobody cared about oil companies – I recommended they buy stock warrants issued by an oil-and-gas exploration company called Occidental Petroleum (OXY). And they shot higher as the price of oil soared.
Now, I know a lot of folks have never heard of stock warrants. That’s a story for another day. But you can also profit by buying regular shares in commodities producers.
Another big winner in the Strategic Investor model portfolio is Lundin Mining (LUNMF). It mines nickel, copper, and zinc in North and South America as well as Europe. And its shares are up 113% since I recommended them to my readers in June 2020.
I’m not telling you this to brag. I’m just passionate about what I do. And I want to get the word out to as many readers as possible that this is a great time to be a commodities investor.
Chris: Let’s start with what’s probably front and center in most folks’ minds today – oil. A barrel of U.S. crude oil costs about $112. That’s 58% higher than where it traded at the start of the year. What’s in store for oil prices as the conflict in Ukraine continues?
Dave: Oil is a huge story right now. We’ve seen crude oil prices go parabolic since Russian forces attacked Ukraine at the end of last month. And it’s probably going to get worse before it gets better. My sources in Uzbekistan tell me that neighboring Kazakhstan – another former Soviet republic – is being drawn into the situation.
Kazakhstan is the world’s 12th-largest oil producer. It’s not officially aligned with Russia. But the two countries have close ties. And I heard yesterday that there’s pressure in the West to boycott Kazakhstani oil. If that domino falls, that’s a lot of supply taken out fast.
So I reckon we’re going to see oil prices go higher from here. That’s important for your readers. Rising oil costs feed into rising prices at the pump and for pretty much everything we buy. We already have rampant inflation. And we’re probably going to see it get worse from here.
Chris: In yesterday’s dispatch, I covered how you can protect yourself from rising inflation by owning stocks in companies that tend to do well when energy prices are rising. And I pointed readers in the direction of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
It’s an exchange-traded fund (ETF) that owns a basket of top oil-and-gas stocks. It’s up about 33% since the start of the year. And it’s up 16% since the outbreak of war in Ukraine.
Dave: Yeah, that’s right. Rising oil prices are a big driver of rising inflation. So XOP – or the more targeted oil-and-gas stock recommendations I make to my readers – is a great way to hedge against rising living costs.
Chris: Let’s move on to agricultural commodities. Together, Russia and Ukraine produce nearly one-third of the world’s wheat. You’ve also been writing about the war disrupting the supply of potash. It’s a potassium-rich mineral compound that’s a key ingredient in agricultural fertilizers. So this has the potential to be highly destabilizing.
Dave: That’s right. This is where it gets really hairy. Belarus, another former Soviet republic, is fighting with Russia against Ukraine. So the U.S. and its allies are hitting it with economic sanctions, too. And Belarus accounts for about 18% of the world’s potash supply.
This is raising the price of fertilizer, further pushing up food prices. And it gets worse…
Natural gas is a key ingredient in nitrogen-based fertilizers. We use these fertilizers on a range of crops, including corn and wheat. And the war is pushing up natural gas prices, too. In Europe, natural gas prices are up something like 125% since the start of the year. And they’re up closer to 800% since the start of 2021.
So there’s this massive price push going on. It’s a powder keg of a situation.
Ukraine also produces a lot of corn. And another source I talked with told me there’s no limit on how high it could go from here. The same is probably true of wheat… and fertilizer.
Now, there’s not a lot your readers can do about corn or wheat exports. But that doesn’t mean they have to be a victim of rising food prices.
They can position themselves on the right side of this worrying trend by picking up shares in the Invesco DB Agriculture Fund (DBA). This ETF holds a diversified portfolio of futures contracts on agricultural commodities including soybean, wheat, and corn. It’ll go up in value as the prices of these commodities rise as well.
If you want a one-stop shop to play rising food prices, that’s probably your best bet.
Chris: Thanks, Dave.
Dave: You’re welcome. Anytime.
Chris’ note: Buying shares in XOP and DBA aren’t the only moves you should make to protect your wealth as inflation soars.
In fact, Dave has a blueprint for how everyday investors can shield their wealth in this market. If you act quickly… you can come out of this difficult time safe, secure, and ahead in your portfolio.
He also put together a report on what 27 items you need to buy right now to hedge against price increases… and to prepare for the months ahead.