Deposits Holding the Winning Trifecta… Copper, Gold, Silver |
Thursday, 11 April 2024 | By James Cooper | Editor, Mining: Phase One and Diggers and Drillers |
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Twitter (X): @JCooperGeo [6 min read] In this Issue: Loading up on stocks with porphyry deposits Is copper signalling a commodity super cycle? What is the gold market seeing? |
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Dear Reader, As you may know, copper, gold, silver and crude oil have been on a tear lately. Here’s the latest Year to Date performance; And it’s this broad lift across different resources that’s creating an air of ‘commodity super cycle’. Rumblings of the 2003 to 2011 upswing years are starting to stir. Back then, everything swelled — from rare earths to iron ore to wheat. The list of commodities that experienced exponential rises in value over that time is extensive. That includes high-profile commodities like gold. Back in 2003, it sold for just US$360/ounce. By the end of the boom years in 2011, it had surged 400% reaching a high of more than US$1,900/ ounce. And just like today, copper followed in gold’s wake. Despite having different demand drivers, the last commodity boom witnessed a 528% gain for copper. It went from a low of US$0.70/pound to a peak of more than $4.40/pound by 2011. Gearing up for the NEXT commodity Supercycle Now, there’s plenty of options for investors looking to invest in the resource sector. You might like to keep it simple with a broad mining ETF. But as members of my paid resource publications would know, we loaded up on stocks holding deposits known as porphyries. Across our two resource-dedicated publications, we hold five stocks leveraged to this deposit style. So, why the focus? Investing in companies that can push beyond junior mining status means they need to have the potential of finding something big. Porphyries are amongst the largest deposit styles for copper, but they’re also endowed with gold and silver. That’s ideal in this current market. While we do have opportunities in Australia, these commodity motherlodes are much more common along the west coast of South and North America. Here, dense oceanic plates collide and subduct below the continental crust. This slow-motion collision compresses the crust, forming a long north-south chain of mountains from Patagonia all the way up to Alaska. But this subduction zone also gives birth to gigantic porphyry deposits; where rich mineralised fluids combine with plumes of rising magmatic rock. While gold and silver are typically considered ‘by-products’ at these mines, at times, the quantity can be so large that it exceeds the total ounces at a standalone precious metal mine. For example, one of our Diggers & Drillers picks has a ‘byproduct’ totalling 4 million ounces of gold within its resource. Assets like this sit high among the majors as potential takeover targets, which is another bonus for investors. So how’s this playing out for members so far? Riding early momentum across copper, gold, and silver prices in 2024, one of our porphyry hunters is up more than 60% since we recommended it in November. Of course, I am cherry-picking one of the bigger winners here; others have barely moved. But that's the opportunity you have as a new investor. The mood for commodities is lifting, but are we in a SUPERCYCLE? With gold breaking into all-time new highs and silver destined to catch up, there’s a strong case for precious metals right now. But the commodity story is much bigger than this. Now, I cringe when I hear the term ‘super-cycle’. It gets bandied about whenever commodity prices start to move. No doubt, 2024 is looking promising but there are some key hurdles to overcome. Last week, I ‘tweeted’ a possible resistance level for copper that could result in a temporary pullback, here it is below: Like gold, a strengthening copper market bodes well for a broad lift across the resource sector. A clear bellwether. But right now, copper is retesting the January 2023 highs, at around $4.26. This is a critical juncture for the copper market and something investors should be watching closely. Now if copper does break through, we could see a rapid move toward the next level, around $4.80. That would mean a retesting of its all-time highs from early-2022. And if that breaks, well, the doors will be wide open for the start of a new super cycle in commodities. This is shaping up as a pivotal moment for the resource sector and copper is the key metal to watch. Your opportunity to take a position ahead of the crowd The resource market is notorious for doing very little for years then exploding rapidly with little warning. As famous mining legend Rick Rule would say…‘Commodity bull markets move a little, at first, then all at once!’ What we’re seeing right now could be the ‘little’, it pays to start preparing now in case we enter the ‘all at once’ phase. How can you capitalise on the potential commodity boom ahead? Remain selective; focus on companies with high quality geological assets. That includes porphyry deposits. There’s still plenty of value in this market, especially at the junior end. But as I’ve shown you, this could change very quickly. To find out more about the stocks I’m recommending to subscribers, you can do so here. Regards, James Cooper, Editor, Mining: Phase One and Diggers and Drillers James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle. With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One. Advertisement: THE FOUNDER OF THE AUSTRALIAN GOLD FUND SPEAKS OUT From 2015 to 2022, his private fund beat the ASX gold stock index seven years running. And when gold last broke out between 2019 and 2022, his fund beat the ASX gold stock index by more than seven times over. Now, he’s going public about what could be the greatest gold stock bull market in modern history. CLICK HERE NOW TO WATCH THE EXCLUSIVE INTERVIEW |
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Doomsday Debt Device Wakes Up |
| By Bill Bonner | Editor, Fat Tail Daily |
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[3 min read] MarketWatch: ‘Gold was headed for its 14th record high this year, with the June delivery price up $10, or 0.4%, to $2,355.60 an ounce. That price marks a new intraday high and surpasses Friday’s record close of $2,345.40 an ounce on Comex.’ At this price, adjusted to gold, the Dow would have to hit 46,000 just to match its 2021 high. What is the gold market seeing? Maybe the same thing we see...a debt crisis fast approaching...and the ‘point-of-no-return’ coming before the next presidential term is over. Then, the feds will have no real alternative but to inflate. To get everyone on the same page... Historically, with only one exception (Japan), debt at over 130% of GDP causes financial disasters. Higher interest rates make it impossible to finance the debt. Then, once the fuse is lit, it can't be extinguished...the deciders can't control what happens next. And ka-boom! Governments typically resort to printing money, counting on sustained periods of high inflation to reduce the debt burden. Our high-confidence guess is that the US will hit the 130% mark before the end of the next presidential administration. Most likely, a financial emergency will arise as stubbornly high inflation keeps interest rates at uncomfortable levels. Nearing $100 trillion in total debt already — government, household, and business — the US cannot afford high interest rates. Companies can’t refinance their bonds. Homeowners can’t refinance their mortgages. The feds themselves can’t borrow without driving interest rates even higher. Sooner or later, a major bankruptcy...or even a big sell-off in the stock market...might be enough to cause the government to panic and push the debt/GDP ratio over the 130% doomsday mark. Since neither of the front runners show any awareness of the problem...let alone a willingness to solve it...we turn our attention to the back runner...RFK, Jr. Not an insurrection From what we can tell, RFK, Jr. is a very different kind of personality and an unlikely politician. He aims to get elected not by guaranteeing to support the status quo — with more money for everybody — but by challenging mainstream ideas. He did that last week by wondering aloud if the January 6 riot at the Capitol really was an attempted insurrection: ‘Reasonable people, including Trump opponents, tell me there is little evidence of a true insurrection. They observe that the protesters carried no weapons, had no plans or ability to seize the reins of government, and that Trump himself had urged them to protest “peacefully.”’ The J6 myth has become a part of America’s sacred fantasies. Questioning it is an unforgivable heresy. RFK was treated as though he had denied the Virgin Birth. We all know there was never the slightest danger that a group of confused yahoos would take over the government or that Washington honchos would flee the Beltway...leaving the nuclear codes with the fellow with buffalo horns. It was never an ‘assault on our democracy’. But challenging the mainstream is an extremely risky campaign strategy. It puts Kennedy at odds with almost all special interests...and cuts him off from the big money behind them. He’s the grandson of one of the richest men in America...but the fortune was spread across such a big family that it didn’t leave him with the kind of money you need for a maverick presidential bid. He brought in Nicole Shanahan as VP, we imagine, partly just to give his campaign a source of independent finance. Suicide Trigger RFK, Jr. called us a few months ago. He had read one of our posts. This was unusual; politicians don’t usually seek out dissenting views. Either he had an earnest interest in what we thought...or far too much time on his hands. We put him in touch with David Stockman, who has a much firmer grasp on federal finances than we do. David is now advising him on fiscal policy. Stockman, a former budget director under Ronald Reagan, is proposing big budget cuts and a much smaller footprint for the American empire. It is the only way to avoid the 130% suicide trigger. Whether or not this advice helps candidate Kennedy’s election prospects, we don’t know. Javier Milei won in Argentina by proposing radical cutbacks. But Argentina was at or near ‘the bottom’. As Milei so eloquently put it, ‘There’s no more money’. But there’s still a lot of money in the US. And the elites — who benefit from deficits and war — want it. They control the press, the bureaucracy, the military, Wall Street and Congress; they’ll do what they have to do to block a real reformer. What will happen? We don’t know...but we’ll stick with our gold as we wait to find out. Regards, Bill Bonner, For Fat Tail Daily All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. |
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