Category Archives: Resources

Is This Often-Overlooked Gold Sector About To Take Off?

Do you remember what happened to the price of gold in 2011? It was a banner year for commodities as the US Dollar was down and demand from China was soaring. But perhaps no commodity had a more memorable run that year than gold.

If you remember, central banks around the world were buying gold by the boatload. And the global financial crisis very much sparked fears of holding fiat currencies. Physical assets became highly sought after. On many street corners you could find shops buying gold and silver in any form they could get their hands on.

That was the year the price of gold hit nearly $2,000 per ounce. The funny thing is, gold has mostly remained elevated since then even though the price has dropped quite a bit (not adjusted for inflation).

Since 2013, gold has swung between roughly $1,100 and $1,400 with the median price somewhere around $1,200. But perspective is important, and as recently as 2004, the precious metal was only $400 an ounce! It’s back up to about $1,350 these days with the USD once again potentially heading south.

Gold investors will buy everything from physical gold (like gold coins) to gold ETFs to gold mining companies. Looking at gold miners, their fortunes are clearly tied into the price of gold. For example, VanEck Vectors Gold Miners ETF (GDX) is down from the $60 level in 2012 to about $23.

But it’s been an even tougher road for junior gold miners. These companies are generally more about prospecting and less about maintaining cash flows. In other words, they’re riskier… and it shows.

VanEck Vectors Junior Gold Miners ETF (GDXJ) was trading at around $160 in gold’s heyday (2011-2012). Now it’s trading about $32. From a percentage standpoint, junior miners got hammered at far bigger clip than established miners.

Of course, this makes sense. If the price of gold is falling, why take a chance on companies which are risky bets to begin with? Investors are far more likely to take risks with gold trading at $1,800 an ounce.

So are junior miners going to make a comeback now that the price of gold has been climbing? Let’s take a look at the options market for some clues.

Regarding GDXJ, options order sentiment has definitely been positive over the last month. On average, 77% of the options contracts which have traded every day over the last 30 days have been bullish. That’s about as lopsided as you’ll see as far as a 30-day average.

In addition, I recently came across a pretty sizable bullish trade on GDXJ options. With the share price at $32.16, a bullish trader grabbed 1,200 November 35-strike calls for $1.61. That’s a $193,000 bet that GDXJ will be above $36.61 by November expiration.

First off, that one block makes up about 10% of the average daily options volume for GDXJ. Relatively speaking, it’s a huge trade for this stock. Second, even though expiration isn’t until November (5 months away), the position doesn’t even break even until GDXJ climbs 14% higher.

In other words, this is a very bullish trade on junior gold miners. And, it likely suggests that gold is going to keep climbing in the coming weeks and months.

Finally, this is an easy trade to make in your own account if you are bullish on gold in the second half of this year. You only risk the money you spend on the calls, but you have unlimited upside potential should gold and junior gold miners take off.

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.

Source: Investors Alley

Copper Is the One Metal You Can’t Ignore

The price of copper is at its highest point since 2014.

The red metal’s price rose from the latter part of 2016 and all of 2017. You can see what I mean from the chart below:

copper

The shift to electric vehicles will be a major driver of this trend going forward. According to Reuters, an industry report stated that the electric vehicle revolution will drive a “nine-fold increase in copper demand” from the automobile sector.

The number of electric vehicles (cars and buses) will rise from 3 million in 2017 to 27 million in 2027. That will drive demand for the metal from 185,000 metric tons per year to 1.74 million metric tons in 2027.

The car sector will go from using less than 1% of the world’s copper supply to 7% (assuming today’s production level).

We are going to need a lot more over the next 10 years to make up for that completely new demand.

The Next Phase in Copper’s Rally

What’s more, that demand will arrive just as the world’s economies come out of a long slumber. In 2016, the world’s GDP grew at 2.44%, the lowest rate since 2009.

However, there are signs that global growth is improving.

Oil demand is up which means copper demand should be too.

There’s an old saying about copper being the metal with a Ph.D. in economics. What that means is that copper is extremely sensitive to economic growth.

If the world is doing well, demand for copper goes up. As demand rises, so does the price. And demand has been surging this year, driving copper’s stellar rally.

However, in the near future, we see a brand-new source of demand on the horizon.

If you haven’t gotten into this  market yet, you need to. This metal’s run is only just beginning.

Good Investing,

Matt Badiali

Editor, Real Wealth Strategist

It’s not silver or platinum. It’s not aluminum, nickel or lithium, either. But this “magic” METAL is found in everything from cars to airplanes, smartphones and computers, even batteries and cosmetics. It even has the power to fight diabetes, depression, weight loss and cancer. It’s worth billions, even trillions. But here’s the problem—this metal is disappearing. The world’s reserves are quickly being sucked dry. But a group of geologists have just struck the motherlode, and the one company behind it could earn investors an absolute fortune as they solve the greatest commodity crisis in human history. [FOR MORE INFORMATION CLICK HERE]

Source: Banyan Hill 

Tesla Can’t Make Electric Cars Without Copper

Experts at copper giant Codelco, the Chilean state-owned mining company, believe the red metal could hit $10,000 per metric ton next year. That’s $4.55 per pound.

It would be a 46% increase from its current price. And that’s after copper prices rose 50% in the past year.

According to the giant mining company, supply and demand are out of balance. There won’t be enough copper to meet demand. And that means rising prices.

A Red Metal Bull Market

As you can see in the chart below, rising prices have been the theme in copper since late 2016:

If the electric car market explodes, as most analysts believe, copper demand will as well. Tesla can’t make electric cars without copper…

In a recent interview for the annual LME Week in London, Codelco Chairman Oscar Landerretche said: “Our projections show a sustained increase in deficits, and we don’t have any reason — that we know of — for closing them in the future.”

This was a huge flip for Codelco. Landerretche attributes the change in outlook to “the acceleration of the electrical economy.”  The company didn’t expect the speed of the change.

Supply of metals from mines is slow to react, both going up and going down. On the other hand, demand can move quickly. When that happens, it can have a huge impact on prices.

Part of that rapidly rising copper demand comes from electric vehicles.

According to analysts at Morgan Stanley, the average electric vehicle has 165 pounds of copper in it. Over 88 pounds of copper are in the batteries alone. The rest is in the vehicle itself. A typical electric car battery is 20% copper, by weight.

If this market explodes, as most analysts believe, copper demand will as well. You can’t make electric cars without copper…

The Copper Sector Is Red-Hot

Today, electrical and electronic products consume 38.7% of the copper supply. Building construction is a close second at 30%.

The copper price rises and falls with the world’s largest economies. When we have robust economic growth, the copper price climbs as supplies tighten. However, when growth slows, supply outpaces demand, and the price falls.

Today, we are in a period where demand is rising. Giant investment bank Goldman Sachs increased its 12-month price target to $3.20 per pound. That’s a serious increase for a metal that spent most of 2017 below $2.75 per pound.

The copper sector is hot, but if the price rises, it’s going to positively boom. Make sure you can profit.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist

It’s not silver or platinum. It’s not aluminum, nickel or lithium, either. But this “magic” METAL is found in everything from cars to airplanes, smartphones and computers, even batteries and cosmetics. It even has the power to fight diabetes, depression, weight loss and cancer. It’s worth billions, even trillions. But here’s the problem—this metal is disappearing. The world’s reserves are quickly being sucked dry. But a group of geologists have just struck the motherlode, and the one company behind it could earn investors an absolute fortune as they solve the greatest commodity crisis in human history. [FOR MORE INFORMATION CLICK HERE]

Source: Banyan Hill 

There’s Life in the Oil Patch

Today, we have too much oil on the market. The supply of oil is still well above its five-year average.

In other words, supply is high.

That should keep prices lower. However, Hurricane Harvey could push U.S. supply down … which is good for oil prices.

There is also the risk of a shooting war between major powers. The strength of the words used by both North Korea and the U.S. are fanning the flames of aggression.

It won’t take much of a mistake to cause an international incident. That risk is driving oil prices higher.

You can see it happening in the chart of Brent crude, the benchmark for European oil prices. Brent hit its highest point since July 2015.

The supply of oil is still well above its five-year average. But for the first time in a long time, it’s time to focus on the oil sector.

For the first time in a long time, it’s time to focus on the oil sector. While oil supply is still strong, demand is warming up.

The European economy is improving. Europe is the world’s second-largest consumer of crude oil. Increasing demand there would go a long way for rebalancing the oil market.

This trend could signal big gains in a beaten-down energy sector.

Regards,

Matt Badiali
Editor, Real Wealth Strategist

Can a $10 Bill Really Fund Your Retirement? The digital currency markets are delivering profits unlike anything we’ve ever seen. ​23 recently doubled in a single week. And some like DubaiCoin have jumped as much as 8,200X in value in 18 months. It’ unprecedented... but you won’t receive any of the rewards unless you put a little money in the game. Find out how $10 could make you rich HERE. ​

An Options Trade That Wins No Matter What Direction Gold Moves

Over the next several weeks, investors will be heavily focused on any news or data which could impact the timing of future interest rate increases. Almost nothing moves the financial markets like major interest rate news.

For a change, we could have new market-moving info on our hands for the first time in many months.

You see, the Fed originally had a plan to increase rates three times in 2017. Their thought was the growing U.S. economy could sustain three small rate increases. The purpose behind these increases is to keep inflation from increasing too high or too quickly. (Two of the three increases have already happened.)

However, recent economic data suggest inflation isn’t of any real concern right now. In fact, it may even be too low (a topic which always sparks a ton of debate).

The key is, the Fed wants to avoid deflation at all costs, even at the risk of inflation rising too quickly. So, with inflation concerns shelved for the moment, the Fed may not have a reason to raise rates just yet. It’s even possible we won’t see another rate hike in 2017.

As you can imagine, whether or not the Fed raises rates again in 2017 is a big deal to short-term investors. That’s why every bit of news from the Fed and any major economic news will be analyzed ad nauseam for clues on when the next hike may occur.

Here’s the thing…

The timing of the next rate increase could have a major impact on the price of gold. As an alternative currency, gold prices will move quite a bit based on what US interest rates do. As such, there’s reason to believe gold could be more volatile in the coming weeks (and maybe months).

At least one big trader believes gold miners could be impacted heavily all the way until next year. Of course, gold miners move pretty consistently with gold prices. And, this trader just spent a pile of cash betting miners as a group will be far away from current levels by this time next year.

More specifically, the trader purchased a large strangle in the VanEck Vectors Gold Miners ETF (NYSE: GDX) expiring in June of 2018. A strangle consists of an out-of-the-money call and out-of-the-money put purchased simultaneously in the same expiration period. In this case, with the ETF at just over $22, the buyer purchased the 18 put and the 30 call. That’s a very wide strangle for such a low underlying price. In fact, with the cost of the trade at around $1.50 per strangle break-even points are all the way at around $16.50 and $31.50.

The strangle buyer clearly believes the next year is going to be volatile for gold and gold miners. The trader purchased 9,300 strangles, so is spending nearly $1.5 million on this trade. In other words, this is no idle bet.

Given what’s going on with interest rates, it doesn’t surprise me that at least one big trader is betting things are going to get interesting with gold over the next year. However, if you believe gold is going to move, you could take a more direct and shorter-term approach.

For example, the SPDR Gold Shares ETF (NYSE: GLD) looks like it could easily be on the verge of a big move either direction. This direct play on the price of gold could also be a good choice if you believe the precious metal is going to move in the next several weeks instead of months.

As of this writing, you could purchase the September 1st (of this year) 116.50-119.50 strangle in GLD for about $2.00. That’s bit more expensive than the GDX strangle from earlier, but it’s far closer to the money. Break even points would be at $114.50 and $121.50 – both very reachable levels in the next month if any economic surprises occur.