Two weeks ago, Matt McCall released his Inevitable Portfolio as a part of MegaTrend Investor research plus a recommendation for a company that produces the raw materials needed for clean energy and advanced technologies – including uranium. It has gotten off to a fast start, but Matt suspects this is only the beginning.
The major indexes may have been down today, but commodities prices are on the rise.
Naturally, the action has caught my attention. So let’s talk about two areas in particular that I’m watching closely for potential long-term investment opportunities.
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Copper hit a new all-time high as the entire industrial metal sector has broken out
McCall’s Call: A combination of underinvestment, strong demand, short supply, and the current geopolitical landscape has pushed many industrial metals to their best prices in a decade. Some – like copper – are sitting at record levels.
This industry’s start to 2022 has been as good as you can imagine. According to Bank of America, it has actually been the commodities sector’s best start to a year in more than a century! Of course, specific niches have led the rally – including the industrial metals and some agricultural commodities.
You can see the strength in industrial metals via the Invesco DB Base Metals Fund (DBB), which tracks copper, aluminum, and zinc. Copper and aluminum prices have already hit new highs, and zinc is trading at its best level since 2007. Nickel isn’t a component of DBB, but it was up as much as 31% today – its biggest daily gain in history.
Russia’s invasion of Ukraine has been a big driver of metals recently, as Russia accounts for 9% to 10% of aluminum exports and 11% to 12% of nickel exports. The rising costs of energy commodities – which are used during the smelting process – have also boosted metal prices.
The breakout in commodities is bullish, but I wouldn’t recommend blindly buying into the trend today.
That said, the industrial metals subsector is worth watching as a potential opportunity on a pullback. As the U.S. economy continues to grow and more building takes place around the world, the demand for industrial metals isn’t likely to fall anytime soon. The supply situation was already dire, and the Eastern European fiasco has only made things worse.
Another wildcard that could work in industrial metals’ favor is the U.S. dollar. Commodities typically move in the inverse direction of the dollar. The U.S. Dollar Index is sitting at a yearly high today, but if the greenback starts to drop, it would act as another catalyst for the trend.
Only time will tell here… but I’m keeping a close eye on the situation for potential opportunities.
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Uranium prices rose to more than $50 per pound for the first time since 2012
McCall’s Call: We talked a bit last week about the upside potential in the nuclear-power industry – and it has also been discussed on my video podcast from time to time.
Here’s a quick refresher: I’m very bullish on the nuclear-energy industry in the months and years ahead because it’s a near certainty that the world won’t come close to achieving its clean-energy goals without it. Believe it or not, nuclear power is one of the safest and cleanest forms of energy available to us. It’s a touchy subject because of the disasters we’ve experienced in the past. But those were the result of accidents and bad actors.
Uranium is the fuel that allows nuclear reactors to produce electricity, and the metal’s spot price has been on the rise lately. And now, it’s breaking out even more. And as you can see in the chart below, the move above $50 – an area of previous support – should act as a catalyst for even further upside.
That makes uranium a solid investment opportunity in both the short and long term.
The situation in Ukraine is the near-term catalyst. Russia is one of the six countries responsible for 85% of all uranium production, and the conflict is causing a supply issue at a time when commodities prices in general are rising.
The long-term story is even more bullish. The recent spike in oil above $130 per barrel is a big wake-up call signaling that nuclear energy has to become a viable option for the future. Oil’s volatility should be enough to expand nuclear energy before even getting into the green-energy movement.
Nuclear energy is clean energy. Many of the people pushing for solar and wind power are against it, but I’m confident they will eventually lose their fight. There simply is no path forward in which emissions get to net-zero without the use of nuclear energy.
There are several ways to play this future…
You could look at the companies that mine uranium, or the leading utility companies in the trend. You could also consider the businesses responsible for building and maintaining power plants.
This is one sector that will be a sleeper winner during the Roaring 2020s – and I’ve already got my MegaTrend Investor subscribers positioned for that upside. Two weeks ago, I released a recommendation for a company that produces the raw materials needed for clean energy and advanced technologies – including uranium. It has gotten off to a fast start, but I suspect this is only the beginning.