Inflation Alert: Metal in Nickel Worth More Than 5-Cents

Publisher’s Note: Episode 105 of Bizarro World is out. 

 

In it, Gerardo delivers first-hand perspective from the Texas freeze and grid failure. And we discuss gold, copper, uranium, and related junior stock names.

 

 

And check out the relevant excerpt below.

 

 

Gerardo Del Real: Let’s start with gold. We've gone on the record saying that until real interest rates actually start trickling back down... you're not going to see a decisive move higher in gold. That has been proven true. Silver, however, does seem to have some life to it. Every time it's pushed back... it seems to be leading higher right before gold turns. And so we talked about it last week, silver being a commodity and gold trading like a currency, we explained the reason why that's happening.

But look, the big action is in the copper space, and in the Bitcoin space, right? Bitcoin topping $55,000, copper at $4.05 a pound. A lot of people congratulating themselves for picking up the copper call 20-cents ago, which is hilarious to me.

As far as the portfolio goes, if you've been a contrarian and if you were buying the way we've been asking you to buy for the last year or two, you're a happy camper. There are a lot of copper stocks that have been doing absolutely nothing from $3.00/lb to $4.00/lb... that all of a sudden magically, right when we get above that $4.00 level, are up 30% in the last couple of days, some higher.

Thoughts on the copper space, Nick? And if you could share your penny story, this is a perfect time for it.

 

Nick Hodge: Oh yeah, it was a nickel actually, so we'll get into it in a second.

But I'll start with gold because we've been calling it for a while. Like you said, we talked about it on the podcast last week, with the rates, and we were talking about why silver can go up. I was writing 10% ago in gold bullion price terms that I was selling gold stocks because they were going to have trouble going up in the face of real rising rates. It's taken the rest of the market a bit to figure that out, but that's exactly what's going on.

And you had bond rates “spike” even higher this week to 1.3% on the ten year. While that's still historically low yield, that's quite higher than it was last August when gold was able to run to cycle highs, and not even cycle highs, all time record highs.

So until those rates stop rising, it's going to be a tough trade for gold. And it's getting closer though, is what I would say. Because like you say, the producers continue to produce gold at multi-year high prices. They're not all time record high prices anymore, but producing gold at $1,800 bucks an ounce is still good work if you could get it on most deposits or mines.

As I see these reports come out...

 

"Newmont increases dividend..."

"Barrick increases dividend…"

 

I feel like we’re getting very close to a gold stock buying opportunity.

Anyway, you asked me about copper. I saw this week that a nickel is now worth less than the metal that's in it. It's something like 75% copper and 25% nickel, and with the price runs that those metals have had — that you and I have been talking about — the price of the metal in the nickel is worth more than 5-cents for any nickel made up to 2014.

Obviously that articulates the drastic price rise of copper and nickel, but it also speaks to inflation when the commodities themselves are outpacing the value of the metal that's in the currency.

That was a bit of an eye-opener this week for sure.

 

 

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