Why True Contrarians Should Be Cheering

by Gerardo Del Real

“Now isn’t the time to think about budget deficits.”

 

These are the reassuring words that Fed Chair Jerome Powell wants you to believe.

 

In the real world, we know that current debt levels are unsustainable and that inflation is here.

Since February of 2020, the quantity of money in the U.S. economy, as measured by M2, has increased by $4 trillion.

That's a one-year increase of 26%, which according to the Wall Street Journal, is the largest percent increase since 1943.

This is before the $1.9 trillion “relief” package being discussed... and a multi-trillion-dollar infrastructure package that will likely receive bipartisan support.

As the 254 counties in Texas start the rebuilding process — a process that will require lots of copper, lumber, and steel — copper, lumber and steel prices are surging.

A great reset is coming, but it will be forced by the markets... not by politicians who seem to think they can schedule a global reset.

In the past five years, the U.S. dollar has lost 45% of its purchasing power against gold, yet in many cases gold juniors are trading at six-month lows.

In the words of Rick Rule, “you’re either a contrarian or a victim.”

Everyone is a contrarian until they have to buy stocks that aren’t going up everyday.

And at the risk of sounding like a broken record, it’s how I’ve made the few nickels I have to rub together.  Whether in real estate... the multiple business ventures I’m involved with... or in the junior resource space…

I have always done best by allocating capital in sectors that are out of favor, but with solid fundamentals and a clear trend.

My copper portfolio just had its best week last week, and while I’m nibbling at names that haven’t caught up yet, the bulk of the juniors in my copper portfolio have been there for years.

Is there still upside if you’re new to the space? Of course.

But ideally you were buying when I was asking you too last year.

Same with uranium names. Same with lithium.

 

The truth is, in this market — with the macro backdrop being what it is — it’s not going to be very hard to do well...

Maximizing those gains, however, is another story.

And with Jerome and Janet at the helm, true contrarians should be cheering the latest consolidation in the gold space.

Just like I encouraged you to increase your uranium, copper, rare earth, and lithium exposure the past few years…

I’m urging you to increase your exposure to quality gold juniors.

I expect mid-tiers and majors to do just that as healthy balance sheets ignite the next wave of mergers and acquisitions (M&A).

Beat them to the punch.