May 29, 2024
An Easy Way to Play the Hard Asset Bull Market
Dear Subscriber,
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| By Sean Brodrick |
Gold, silver and copper have ramped up nicely this year. So, it was a shock to many when these hardest of hard assets fell down the stairs last week.
Gold fell more than 4% in two days, and copper plunged more than 6% in just two days. Stocks leveraged to these commodities took an even bigger plunge.
The bears rushed to claim that the commodity bull market was already over.
Is it? Oh, it’s hardly begun.
In fact, this pullback could become the best investing gift you’ve gotten so far this year.
BUY THE DIP!
What drove the sell-off is Federal Reserve members said they were open to raising interest rates again if inflation doesn’t cool off further. That’s according to the minutes of the April-May meeting released last Wednesday.
Suddenly, traders are worried the Fed won’t cut rates this year.
Me, though, I listen to Fed Chair Powell.
Recently, he said again that inflation is falling more slowly than expected, and we need to be patient. But also that Fed policy is working. And that’s why I think rate cuts are still coming.
But for now, money is flowing out of precious metals and into the “safe haven” of the U.S. dollar.
I hate to use air quotes. But hear me out.
Both sides in Washington have the currency printing presses going so fast that the world is getting flooded with greenbacks.
But you can’t print gold. It’s trading just below its all-time high, near $2,400 per troy ounce. And if you prefer to own paper gold via ETFs like the SPDR Gold Shares (GLD), that’s fine too.
Buy the dips when you see them … before you don’t see them again.
You know who else is buying right now?
China
In the first quarter, Chinese private gold imports accounted for 543 metric tonnes of the yellow metal. At the same time, the People’s Bank of China (PBoC) added 189 tonnes to its reserves.
Most of the PBoC’s purchases are “unreported.” So, there’s a possibility that these figures are higher. Maybe a lot higher.
Who could blame the Chinese for buying more gold?
Beijing is talking openly about dollar devaluation. If our government was doing that, I’d be swapping my paper for gold bars, too!
That’s why any pullback in gold is a buying opportunity. The same for silver … copper … and commodities in general.
Here’s a fact most people don’t realize: We’re in a …
Big Commodity Bull Market
Not just a bull market but, rather, a “Supercycle,” as this chart of the iShares S&P GSCI Commodity-Indexed Trust (GSG) shows.
GSG 20-year performance chart.
Click here to see full-sized image.
We’ve seen two commodity Supercycles in recent memory.
One lasted 12 years from 1968 to 1980, or 12 years. The next one lasted from 2002 to 2013. Also 12 years.
This is due to how long it takes to bring new supplies online when prices go high.
I’d say the odds that this Supercycle lasts at least 12 years are better than average. And we’re only in the third year!
The GSG offers an easy way to play the hard asset bull market. This ETF tracks a basket of 24 different commodities.
While it’s weighted toward oil, it also tracks natural gas, copper, zinc, gold, silver, wheat, corn, cattle and more. And they are collectively roaring higher.
So yeah, buy the dips. Not just in gold. Not just in silver. Not just in copper. But buy the dips in commodities.
Because man, we are at the start of something big. And it could prove to be generational wealth for you and yours.
If you want to buy the broad commodity group, the GSG is an easy way to do it. Weiss Ratings gives it a “C,” and it has an expense ratio of 0.75%.
For potential outperformance, you can also buy stocks leveraged to the underlying commodities. But my chart work suggests that GSG could potentially triple from here during the life of this Supercycle.
All the best,
Sean
P.S. Another way to play the next nine years of this Supercycle is to get in on miners and drillers before they even hit the market.
My colleague and friend Chris Graebe recently showed his readers how to do this on an oil play that is successfully using AI to increase production.
Now, he has another pre-IPO opportunity lined up … one that could potential disrupt a $1.4 trillion industry. I urge you to check out his full presentation here.
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