Commodities Rise – Here’s My Best Way To Cash In
The goods are on fire.
The price of oil has jumped 43% since the start of the year.
Palladium – a metal most often used in catalytic converters – rose 28% over the same period, while wheat jumped 39%…
Early career of George Soros
George Soros is one of the most (in)famous figures in the world of finance. Known as ‘the man who blew up the Bank of England’, thanks to his $10 billion bet against the pound in 1992, Soros is one of the most successful hedge fund managers of all time. . While he was head of the Quantum Fund Read more
Q4 2021 Hedge Fund Letters, Talks & More
These are major movements. But I see that commodity prices have risen again this year.
Specifically, there is a huge opportunity in one of the most overlooked corners of the commodities market.
I’ll show you how to position yourself for that in a minute. But first, let’s look at why commodity stocks have been on such a tear lately.
Rise in commodity prices
You see, Russia is the world’s second largest producer of oil and the second largest producer of natural gas.
It is the sixth largest coal producer in the world. And it ranks third in the production of potash and nickel.
The problem is that Russia effectively cut itself off from the world economy by invading Ukraine.
Countries around the world have hit Russia with a tidal wave of economic sanctions…
And two weeks ago, the United States announced that it would no longer buy Russian oil.
It is enormous. When you take Russia off the board, there’s a lot less oil, natural gas, coal, and wheat to move around. In other words, we are seeing a global supply shortage for many essential commodities.
- Ukraine is also a major player in the resource market…
It represents 13% of the world’s corn production and 8% of the planet’s wheat. And it is the largest producer of sunflower oil.
With Russia and Ukraine effectively excluded, the global commodity supply chain has shrunk overnight.
This is why we have seen such explosive price increases in the commodity market.
Unfortunately, these massive changes will take months, if not years, to correct.
This makes energy, metals and agricultural stocks good bets at this time.
Uranium stocks could return to favor
- But I’m even more bullish on uranium.
Uranium stocks have been neglected for years.
But that is about to change…
As you can see, uranium stocks are waking up in a big way. This graph shows the performance of the Global X Uranium ETF (NYSEARCA:URA), which invests in a basket of uranium stocks. It has increased by 37% over the past year. This is more than double the return of the S&P 500 over the same period.
I see uranium stocks headed much higher in the coming months.
You see, the US electrical industry gets about half of its uranium from Russia and its allies Kazakhstan and Uzbekistan. This model is no longer viable in light of what is happening between Russia and Ukraine.
Two weeks ago, Republican senators introduced a bill to ban imports of Russian uranium. It was also reported yesterday that Russia is considering banning uranium exports to the United States.
At this point, it is virtually certain that domestic uranium production will become a major political issue in the years to come, probably much sooner. American politicians are likely to view domestic uranium production as a means of achieving “energy independence.”
This is a recipe for much higher uranium prices…
This is clearly good for the actions of uranium miners.
And I expect the next bull market in uranium stocks to blow up what we’ve seen recently for other commodities.
To understand why, look at this chart. It compares the market values of publicly traded uranium stocks with oil and gas stocks. You can see that the uranium market is a tiny fraction of the oil market…
In other words, it won’t take a lot of money to boost uranium stocks.
But don’t just take my word for it…
During the last uranium boom, Cameco Corp (NYSE: CCJ)— the largest publicly traded uranium company — saw its share price rise from $1.70 in 2002 to $56 in 2007. That’s an increase of +3,200% in just seven years!
Smaller uranium stocks like Paladin Energy generated even bigger returns.
Of course, volatility goes both ways with uranium stocks. So I’m not suggesting speculating on small stocks of uranium without doing your research. And as always, never bet more money than you can afford to lose.
However, the URA is a great one-click way to profit from a uranium bull market.
3 Breakthrough Stocks That Should Double Your Money in 2022
Get our latest report where we reveal our three favorite stocks that can bring you 100% gains as they disrupt entire industries. Get your free copy here.
Article by Justin Spittler, Mauldin Economics