That was one of the big takeaways from the Legacy Research annual subscriber conference in Washington, D.C., at the end of March.
Regular readers will know colleague Teeka Tiwari as the guy who’s delivered triple- and quadruple-digit gains on the world’s most exciting crypto projects.
He doesn’t often talk about natural resource investing. But here’s what he told the audience during one of the on-stage panel discussions I (Chris Lowe) moderated at the conference…
This decade, we’ll see an explosion in demand for base metals and other commodities.
If you talk to people about commodities right now, their eyes glaze over. But it’s obvious to me that we’re in the very early stage of a commodities boom. I predict that over the next three years, the most popular person at these events will be Dave Forest – our natural resource investing expert.
But the natural resource asset class has been one of the most profitable this year.
It’s been able to protect you from plunging tech stocks and crypto.
The Invesco DB Commodity Index Tracking Fund (DBC) tracks the prices of commonly traded commodities like oil, gas, gold, and silver.
It’s up 44% this year… versus a 23% fall for the tech-heavy Nasdaq.
But don’t worry if you missed out on the gains so far. There’s more to come…
On Wednesday, Dave is hosting an emergency briefing about a coming surge in natural resource prices – something he calls a commodities “Super Spike.”
Dave isn’t a deskbound analyst. He’s a professional geologist and mining entrepreneur who crosses the world finding and developing mines. He lives and breathes the commodities market.
So all this week at the Cut, I’m spotlighting the opportunity Dave sees ahead.
But before we get into the specifics of the Super Spike, let’s go over the four main drivers of soaring commodities prices.
That stands for “environmental, social, and governance.” It’s a catch-all for socially responsible investing.
Investors – especially younger ones – are screening potential investments for their impacts on the world. Mostly, they’re looking at a company’s effect on global warming. And they’re pressuring polluters to cut back on emissions.
For instance, in May 2021, activist investors forced Royal Dutch Shell (SHEL), Chevron (CVX), and ExxonMobil (XOM) to curb oil production.
Governments are also backing the ESG agenda.
The Biden administration has delayed decisions on new oil and gas drilling on federal land because of environmental concerns. It’s also canceled leases for copper and nickel mining to protect wilderness areas.
The first was due to COVID-19.
People got sick and couldn’t work. Governments issued stay-at-home orders. This meant mines and other commodities-extraction businesses had to shut down. It also made it harder and pricier to ship raw materials around the world.
The second supply shock came after Russia invaded Ukraine.
Russia is the world’s largest exporter of natural gas… the second-largest exporter of crude oil… and the third-largest exporter of coal.
But after Vladimir Putin ordered the invasion of Ukraine, the U.S. and its allies scrubbed Russia from the mainstream economic system almost overnight.
This has made it hard for Russian commodities exporters to do business with the rest of the world.
Sanctions are shutting them out of the international banking system. And companies are refusing to insure the ships Russians need to send commodities overseas.
Agricultural commodities are also under pressure from the war.
Ukraine is the world’s fifth largest exporter of wheat and the fourth-largest exporter of corn. It’s now a war zone. So many of those key exports are offline.
Commodities prices are the result of supply and demand. So unless demand drops with it, falling supply pushes up prices.
It’s Dave’s term for the commodities that go into the world’s most exciting new technologies.
As he’s been spreading the word on, you need lithium, nickel, and cobalt for the lithium-ion batteries that power electric vehicles (EVs). Without these metals, the batteries can’t hold a charge.
And the typical EV needs about 186 pounds of copper for all the wiring that brings electricity around the car. That’s almost 4x what goes into the typical gas guzzler.
We also need them in a range of high-tech military tools such as ballistic missiles, fighter jets, and drones.
Plus, you’ll find these metals in the batteries of every smartphone, tablet, and computer in the world.
This makes these commodities great ways to play cutting-edge tech trends.
Consumer prices are rising 8.3% annually in the U.S.
The last time inflation was running this hot was in 1982, when Ronald Reagan occupied the White House.
That’s been pushing investors into commodities to protect their buying power. Here’s Dave with more…
Inflation isn’t about rising prices of goods and services. It’s about the falling value of a currency. It costs next to nothing to create new dollars. The federal government spends them into existence. Or commercial banks loan them into existence.
The details of how this happens aren’t important. The takeaway is the supply of dollars is theoretically infinite. That makes it prone to inflation. The more dollars in circulation, the less each dollar is worth.
Commodities, by contrast, are “hard assets.” They’re hard to produce more of. It takes real-world inputs such as energy and labor to get oil, nickel, iron ore, silver, gold, and so on out of the ground. And there’s only so much of these natural resources on Earth. So nobody can inflate their value away.
The ESG trend and geopolitical disruptions are endangering new supply.
There’s soaring demand for hard tech such as lithium, nickel, and copper.
And investors are flocking to hard assets to shield our buying power from record inflation.
The gains on offer are explosive.
Dave has given readers of our Strategic Investor advisory the chance to close out gains of 194%, 284%, and 385% on lithium mining stocks.
And last year over at his International Speculator advisory, he gave them the chance at gains as high as 187%, 241%, 247%, and 326% on commodities stocks.
You’ll notice these are gains from commodities stocks. Dave doesn’t recommend investing in commodities directly.
That makes these investments very accessible. You can easily buy commodities mining stocks… and oil and gas stocks… through your regular broker. You don’t need to open any new accounts.
Dave says this isn’t a run-of-the-mill commodities rally.
It’s what he calls a Super Spike – a speculator bull run in many commodities at once.
These Super Spikes have made investors fortunes throughout history. Back to Dave…
In the late 1970s, uranium “super spiked” from an inflation-adjusted $50 a pound to more than $200 a pound. This drove uranium stocks into a frenzy.
And not just uranium soared. From 1971 to 1975, copper gained 172%. Oil went up 900%. And silver surged more than 2,600%. That’s enough to turn a $10,000 investment into over $275,000.
That’s just one example. Super Spikes repeat throughout history.
So make sure you’ve signed up for Dave’s Super Spike Summit on Wednesday at 8 p.m. ET. He’ll reveal why this Super Spike could be up to triple the size of any we’ve seen before.
It’s free to attend. Secure your spot here.
Then tune in to tomorrow’s Daily Cut for more from Dave on what makes Super Spikes so profitable.
Until tomorrow,
Chris Lowe
June 6, 2022