Sean Brodrick, Editor of Wealth Megatrends, Supercycle Investor, Resource Trader, and contributing analyst to Weiss Ratings Daily, joins us to review how he is trading these volatile markets on the back of Middle East geopolitics, and where some trends in commodities have reversed this first full week of May. We’ve witnessed oil and critical minerals turn down the middle to end of this week after running hard the last couple months. Conversely, we’ve seen a positive upswing in gold and silver prices, and their related mining stocks; after having been under pressure the last couple months.
With regards to the critical minerals stocks, he narrows down this wide range of minerals to a focus on finding exposure to the rare earths used in high-strength permanent magnets like Neodymium and Praseodymium, and the heavy rare earths used in defense and thermal resistance like dysprosium and advanced technology and energy efficiency like terbium. We also discussed the big runs over the last year in defense metals like antimony and tungsten, and the uptick we’ve seen in lithium prices.
In particular, Sean is curious what will happen to the Chinese export controls on rare earther that were eased last November for a year, that are set to expire this November. We review how that is leverage that China may use once again, that could factor into future global trade policies.
- He noted that most nations do recognize they need to break their dependence with China on a number of these critical minerals, as it relates to both mining and their processing and refining.
- Some select resource and processing companies will still benefit from future government funds and policy initiatives like pricing floors in some critical minerals to support these their development industry, infrastructure, and defense.
- He views moments like these, where the critical minerals are finally pulling back a bit, as opportunities where investors that missed a stock on the way up, now get another opportunity to accumulate into these pullbacks.
Sean is encouraged by the move back higher in the precious metals sector this week and remains bullish on gold and silver for the medium-term to longer-term, because all the broader fundamental macroeconomic challenges and geopolitical factors are still in place and haven’t really been solved.
- He outlines that some of the selling pressure in gold the last couple months has been from central banks in the Middle East that have had their oil exports hampered, and thus have been selling gold to counter losses in energy revenues. That selling pressure in gold will subside when and if a resolution is reached with regards to the Strait of Hormuz.
- We also discuss some of the recent pops in gold and silver producers as they have reported solid Q1 earnings, and yet the irony of them trading below where they were previously at lower margins and earnings.
- We debate whether strong economic numbers in the gold and silver stocks will bring in more generalists, and how many investors outside of resource focused investors are actually tuned into the financial strength of the PM producers, much less actually hold some of these stocks in their portfolios.
We wrap up discussing the ever-shifting narratives on the Middle East war, and the longer-term implications for oil prices.
- Sean believes oil prices will remain more elevated than they were averaging prior to this Middle East conflict, and doesn’t see them going back down to where they were previously.
- He points to the sheer amount of infrastructure and business damage inflicted to the energy sector in the Middle East, and highlights that it will take some time and be a much longer process than the more optimistic outlook that the market is factoring in at present.
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