Gerardo Del Real
March 24, 2023
Jerome has spoken. In a unanimous vote, the Fed has decided to hike rates by 25 basis points.
Gold was up 1% on the news, silver was up nearly 2%, the dollar retreated 0.60% and so on and so on.
The unanimous vote was interesting; the rest was about what everyone should’ve expected. What everyone should’ve expected was a shift in tone that maybe we’re near the end of the tightening cycle.
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“The Committee would be prepared to adjust the stance of monetary policy as appropriate if the risks emerge that could impede the attainment of the Committee’s goal.”
We’ll see what the market decides to do about that. In the meantime, I’m urging you to take advantage of the risk averse attitude in the markets to allocate capital to sectors that have – broken record I know – bullish megatrends regardless of what Jerome says.
I told you last month gold would start to rear its head higher; that’s happening.
The lithium sector has undergone a brief and healthy consolidation relative to the bull run it’s been on the past several years… a run that will continue and a consolidation that I believe is nearing an end.
Same goes for copper. There are quality miners, developers, explorers with robust resources that are trading at a fraction of where they’ll be by year-end. Consolidations are healthy and opportunities.
The co-head of metals and minerals at the world’s biggest copper trader said recently that the copper price could hit a new record high within the next 12 months owing to very tight stocks, even above $12,000 a tonne.
“I would highlight copper as the most critical metal globally given the shortage in the market. We only had 3.5 days of copper stock equivalent at the end of last year,” Trafigura’s Kostas Bintas told the FT Commodities Global Summit.
That’s with demand curtailed for a number of geopolitical reasons.
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And then there’s uranium. A recent report highlights how to achieve the stated goal from the DOE of 200 GW of new nuclear by 2050 requires the fuel supply chain capacity to increase by 200-300%.
The U.S. must expand uranium mining and milling by over 130 million lbs/yr of U308 or grow by 22x the most recent peak.
Now is the time to prepare to reap profits from what I believe will be one of the most historic commodity bull markets ever. The time to buy low is now.
Gerardo Del Real
Editor, Daily Profit Cycle