The Commodity Super Cycle Shines as Markets See Red

Gold is now trading right around US$2,000 an ounce and may soon break above its all-time spot high of US$2,075 as the broader market teeters on the brink of official bear market territory. 

Silver, which typically trades in tandem with the yellow metal, is also surging toward multi-year highs above US$26 per ounce.


Likewise, green energy metals such as platinum, palladium, nickel, copper, lithium, and uranium are all up BIG as Putin’s war continues to drive up oil, natural gas, and gasoline prices. 

As you’re likely aware… we’ve been talking about the new commodities supercycle and how to position — well before Putin decided, on his own, to invade Ukraine.

Our thoughts continue to be with the people of Ukraine, and we hope for their safety, safe return, and continued independence in the face of this unprovoked incursion. 

Of course, no one can get into Putin’s mind to gauge just how far he’s willing to take this. As of now, his wanton ambitions appear to be growing — not abating. 

I mentioned uranium. It’s now above US$50 per pound as the world is handed yet another stark reminder that being overly reliant on rogue nations for its energy requirements is a truly unwise position to be in. 

With uranium gaining momentum above that critical price threshold, America’s return to its glory days as a ‘self-sufficient uranium producer’ appears imminent.

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We have one small-cap uranium development company that’s aiming to corner the US market. 

Gasoline prices are also continuing to climb as President Biden has now issued a ban on all Russian energy imports. The average national gas price now stands at $4.17 per gallon — the highest level ever! 

Of course, the US only gets about 3% of its oil from Russia. Compare that to about 61% from our much friendlier neighbor to the north — Canada.

Europe, on the other hand, is reliant on Russia for about 40% of its natural gas supply. Germany has it even worse at about 55% and is now considering ramping up its nuclear energy capabilities. 

And it certainly doesn’t help that much of that Russian natural gas flows through a pipeline — managed by a Russian state-owned company — that runs directly through Ukraine.

So much for energy security for that part of the world!

All of this upheaval is quickening the pace and fervor of the new commodities supercycle we’ve been screaming from the rooftops about for months.

Markets loathe uncertainty. You’re now seeing that manifest in the Dow, Nasdaq, and S&P performance. 

As volatility rises, investors traditionally turn to safe-haven assets like gold and silver — and we’re seeing that play out now too. 

Of course, that doesn’t mean the market for these metals is heading straight up. There will be plenty of pullbacks along the way as investors take profits.

That’s the nature of commodities bull markets. As upside moves begin to consistently outweigh the pullbacks, new support levels are reached and tested at increasingly higher price points.

And that means astute speculators can do very well by buying the dips in the precious, base, and green energy metals.  

In particular, we just went through a brutal, 18-month consolidation in the precious metals space. The small-cap junior gold-silver explorers were particularly hard hit. 

The result of that is we’re now being presented with a timely opportunity to initiate or add to quality positions that are poised to ramp up in value rather quickly as gold and silver continue to shine. 

Again, the tailwinds for today’s commodities supercycle — such as supply chain issues and rampant inflation due to the easy-money policies of the last several years — were in play well before Russia’s invasion of Ukraine

Powell & Co. have announced their intent to rein in inflation with a rate hike at the next Fed meeting on March 16th. But with the ever-evolving situation in Ukraine already cooling off the markets to some extent, even a quarter-point rate hike may be shelved for the time being. 

Clearly, the Fed is going to begin tightening to some degree at some point. And as history has shown, a tightening Fed cycle typically results in a significant gold rally. We saw this scenario play out most recently in 2015.

As geopolitical tensions eventually wane… lifting the curtain on some sort of new normal… the bloodletting in the markets will reverse course leading to a temporary pullback in the precious metals. 

Yet, it won’t take long before the market comes to the realization that the trillions of dollars in recent deficit spending, along with the rising costs of servicing our nation’s record debt load, have the Fed in an untenable position. 

So make no mistake about it… the ill-fated monetary policies of the Fed are coming home to roost and will be manifested in a multi-year bull market for gold and silver.

We’re positioning now. 

Mike Fagan

Mike Fagan
Editor, Daily Profit Cycle