April 11, 2022
Progress is rarely comfortable.
This is a truth that just about everyone learns through life. Going through school, establishing a career, making a major lifestyle change, all of these things come with some level of discomfort.
Still, once it’s all over, the result is usually worth it.
It makes sense that this same line of thinking applies to our economy and our progress as a country.
Rising commodity prices based on overreliance on unfriendly countries is making us look at just how we get what we need to power our vehicles and heat our homes.
And the progress there would come from sourcing essential components here at home instead of overseas.
So then why is the country’s own government standing in the way of that progress?
You may have heard the recent news that President Biden has invoked the Defense Production Act. He wants to get more domestic battery manufacturing done. The move covers increasingly important metals like nickel, cobalt, and graphite. It’s part of the plan to not just get away from relying on foreign sources for these metals, but get away from fossil fuels so that we can fight climate change.
That’s all well and good, except for the fact that the President’s will and the reality of getting the job done are two things at odds with each other.
There are a few examples of this, but for just one instance, let’s look at a recent discovery in Newry, Maine. There, a lithium deposit with 11 million tons of ore, valued at over $1 billion, would go a long way in helping to bolster domestic production.
The problem is that permitting issues make it hard to know whether or not a single ounce of the metal would ever be pulled out of the ground.
Our country has strong environmental laws. A consequence of that is it takes a long time to get the permits that allow for mining in a given location. On top of that, once a mine does get built, it can take years before the first minerals are actually extracted.
The lithium deposit in Maine is just one example.
Last month in California, K2 Gold Corporation suspended activity at its Mojave project due to a Bureau of Land Management decision to request a full environmental impact statement just as the project was getting ready to go.
And then there’s the case of 9,000 unused oil drilling permits.
When the President announced the release of oil from the Strategic Petroleum Reserve, he mentioned that there were 9,000 unused oil drilling permits. He floated the idea of raising fees on the companies behind the leases if they continue to go unused.
That makes for a good headline, but the reality is more nuanced. In some cases, these leases are tied up in legal battles and regulatory practices. In others, the economics of profitable drilling just aren’t there yet.
The politics of it all are murky, but the point I want to make here is that all of these are factors behind the commodity bull market that we’re seeing now. And they’re all factors that will drive it for the next few years.
Protecting the environment while bringing commodities like oil and metal to market is going to be a tall order. There’s no telling what that solution is going to look like or how long it’s going to take.
In the meantime, that means there are profits to be had from the supply that is already out there.
With all of the geopolitical and demand factors that are causing the supply crunch, investors who have their money in the right commodities stocks will be able to profit throughout this cycle.
These are the kinds of inflation stocks that will do well no matter what happens over the next few years.
The runs these commodity stocks are set to go on will generate the kinds of returns most investors only dream about.
Learn all the details here.
Editor, Daily Profit Cycle