If you're looking to make a fortune in the stock market, you may want to consider investing in commodities. From gold and oil to wheat and coffee, commodities are an essential part of the global economy, and they can provide investors with the opportunity to profit from changes in demand and supply. For our purposes here today, three such commodities - silver, platinum, and uranium - appear to be positioned for the mother of all bull markets.
So, what is the current state of the commodities market?
Overview of the current state of the commodities market
The commodities market is currently experiencing a period of volatility due to a number of factors, including the ongoing impact of the COVID-19 pandemic (including supply chain disruptions that impacted supply for most commodities world wide, to stimulus checks that increased demand for commodities across the board) and geopolitical tensions. However, some analysts believe that we are on the cusp of a commodities bull market, which could present a unique opportunity for investors.
Factors influencing the commodities market
There are a number of factors that can influence the commodities market, including economic and political developments, changes in demand, and supply disruptions. For example, an increase in the demand for a particular commodity, such as copper or oil, could drive up the price, while a decrease in the supply of a commodity, such as wheat or corn, could also lead to higher prices.
Examples of popular commodities
Some of the most popular commodities include precious metals like gold, silver, and platinum, industrial metals like copper and aluminum, and energy sources like oil and natural gas. These commodities are in high demand for a variety of purposes, including jewelry, industrial processes, and transportation.
One of the least popular commodities, for a variety of reasons - uranium - is finding itself amidst an ongoing energy crisis and a green revolution. Assuming it doesn't explode, uranium is a zero waste energy source, and there isn't enough of it to go around.
So, what could drive a commodities bull market?
Economic and political factors
One factor that could drive a commodities bull market is economic growth. As the global economy expands, there is typically an increase in demand for commodities, which can drive up prices. Political developments, such as trade agreements or political instability in commodity-producing countries, can also influence the market. And as we saw over the last year, supply chain disruptions can leave an entire country hurting for basic staples - wheat, gasoline, coffee, etc.
Changes in demand for particular commodities
Changes in demand for particular commodities can also play a role in a bull market. For example, if there is an increase in demand for copper due to the construction of new buildings or infrastructure, it could lead to a rise in the price of copper.
Shortages and supply disruptions
Finally, shortages and supply disruptions can also contribute to a commodities bull market. If there is a decrease in the supply of a particular commodity, such as a drought affecting the production of wheat, it could lead to higher prices for that commodity.
So, what about the trifecta: silver, platinum, and uranium?
Overview of each commodity
Silver is a precious metal that is widely used in a variety of applications, including jewelry, electronics, and industrial processes. On the investment front, it's also a high beta alternative to gold, providing far greater upside in bull markets, yet greater risk in bear markets.
Platinum is another precious metal with a variety of uses, including jewelry, catalytic converters, and chemical reactions. Up to 50% of it's current use is in catalytic converters, but that percentage could shift dramatically when it's investment thesis fully unfolds, and investors scoop up as much as they can.
Uranium is a radioactive metal that is used as fuel for nuclear power plants. It finds itself in a precarious place, after years and years of under investment, and rapidly rising global demand due to ongoing energy shortages worldwide. It's the greenest energy source we know of (though it has been at the center of several nuclear catastrophes). Nuclear technology has improved tremendously in just the last decade, and risks of nuclear plant explosions aren't as worrisome as they once were.
The current state of the market for each commodity
The current state of the market for silver, platinum, and uranium varies. Silver is currently trading at around $23.5 per ounce, while platinum is trading at around $1,050 per ounce. Uranium, on the other hand, is trading at around $40 per pound. All three are demonstrating long term bottoming (reversal patterns) after two years of decline / consolidation.
Potential drivers of a bull market for each commodity
There are a number of potential drivers of a bull market for silver, platinum, and uranium. For example, an increase in the demand for silver due to its use in electronics, jewelry, or solar panels could lead to a rise in the price of silver.
An increase in the demand for platinum due to its use in catalytic converters or other industrial processes could also drive up the price of platinum.
Similarly, an increase in the demand for uranium due to the expansion of nuclear power could lead to a rise in the price of uranium.
While there are potential rewards to investing in the trifecta, it's important to also consider the risks and challenges of investing in commodities.
Price volatility
One risk to consider is price volatility. Commodities are subject to changes in demand and supply, which can lead to significant fluctuations in price. This volatility can make it difficult to predict the future value of commodities and can create uncertainty for investors. Unless one is a highly skilled trader, buy and hold strategies without leverage are probably ideal. If one wants to ride these bulls, do whatever you can to not get bucked off. Leverage kills, and these markets all have explosive rallies and vicious corrections.
Dependence on a single market or commodity
Another risk is the dependence on a single market or commodity. For example, if you invest heavily in a particular commodity, such as oil, and the demand for that commodity decreases, it could have a significant impact on your investment. Similarly, if you invest in a particular market, such as the Chinese market, and there is a downturn in that market, it could also affect your investment.
While these markets are different, there are similar macro forces at play that will probably lift all together, or crash them down. So while owning all three may seem like diversification, you may want to treat silver, platinum, and uranium as a high risk, high reward trifecta that together, account for part of your holdings only.
The potential for substitutes
Finally, there is the potential for substitutes for certain commodities. For example, if the price of copper were to rise significantly, it could lead to a decrease in demand for copper and an increase in the demand for a cheaper alternative, such as aluminum.
For platinum, palladium can stand in should platinum prices rise significantly. This can lead to a rapid switch in material selection, and bring prices down just as quick.
For silver, many investors track the gold-silver ratio, looking at historically relative valuations to switch capital from one to the other. While they have different industrial uses, they're both used in jewelry and provide similar hedges against inflation and currency devaluation. Silver comes out of the ground at 8 ounces to 1 versus gold, yet their ratio is closer to 70 to 1. That ratio has gone to single digits in bull markest past, and likely will again. Something to consider for those gold bugs out there. Yellow may not be the hottest metal for long.
Unless of course you mean uranium. Uranium, at least presently, has no substitute, which is what makes it one of our primary focal points. The prices must rise or the lights go out. It's as close to an inevitability as they come, but not without the caveat that markets are markets, and a looming recession in 2023 could hammer all three of these markets... temporarily.
Despite these risks, there are also potential rewards to investing in the trifecta.
Diversification benefits
One potential benefit of investing in the trifecta is the diversification benefits it can provide. By including silver, platinum, and uranium in your portfolio, you can spread your risk across a variety of asset classes, which can help to reduce the overall risk of your investments. This is especially important in times of economic uncertainty, when the performance of one particular market or asset class may be more volatile.
But! as mentioned above, the rising tide that carries all boats may ebb and flow, and if we see significant economic ebbs this year, these may have similar reactions, and not act as a diversified portfolio.
Potential for price appreciation
Another potential reward is the potential for price appreciation. While past performance is not a guarantee of future results, silver, platinum, and uranium have historically been stable (if not explosive) investments and, with the right market conditions, they could potentially see significant price appreciation.
High demand in various industries
Finally, silver, platinum, and uranium all have a high demand in various industries, which can make them more stable investments compared to some other commodities that are more reliant on a single market. This means that the trifecta may be less prone to sharp price fluctuations, providing a more stable investment opportunity.
They're not going to go to zero, like many cryptos, and even some stocks. There's enduring value. So while we may see temporary fluctations and declines, the downside should be limited, while upside is potentially exponential.
So, how can you invest in the trifecta?
Options for investing in silver, platinum, and uranium
There are a number of ways to invest in silver, platinum, and uranium, including purchasing physical versions of the metals in the form of coins or bars, or investing in companies that produce these metals or exchange-traded funds (ETFs) that focus on these commodities. It's important to consider the pros and cons of each option and choose the one that best fits your investment goals and risk tolerance.
A broad overview of those pros, with links to dig deeper:
Silver investment ranges from physical coins and bullion, to mining stocks, to ETF's and futures. It's one of the few commodities built for self-storage and home ownership, carrying alot of value in a relatively small space. You might consider silver a high beta alternative to gold. Both have similar investment theses at present, with a precarious economic environment, rising inflation and interest rates, and limited supply. But silver has wide industrial applications that gold doesn't, is far cheaper, and is historically undervalued relative to gold (see gold-silver ratio). So where gold may double over the coming few years, silver is likely to 5-10X.
Platinum investment, like silver, has the benefit of many investiment vehicles, from bullion to stocks to futures. With massive jewelry and industry applications, it benefits by real world growing demand (19% coming into this year). While you can own platinum coins and bullion, it's probably better to focus on liquid assets like stocks and ETF's.
Uranium investment is perhaps the best of these three, though with the fewest investment options. You can't have it delivered to your house or effectively trade futures, but you can invest in the stocks that pull it from the ground, and a few ETF's that diversify that selection for you. It's biggest advantage, by far, is the ridiculously small size of the market, with total market cap of just $1.4 billion! Smaller than certain memecoins in the crypto space. And unlike those shitcoins, uranium does stuff, and if we don't use it, the lights go out. Lessons from the last uranium bull market can inform the one to come, from stocks doing 50-100X returns in a few short years, to Uranium itself nearly quadrupling. When this metal lights up, things get explosive.
Tips for minimizing risk
To minimize risk when investing in the trifecta, it's important to diversify your portfolio and invest in a variety of assets. This can help to reduce the overall risk of your investments and protect you in case of a downturn in any particular market. It's also a good idea to do your research and understand the underlying factors that may influence the silver, platinum, and uranium markets, such as changes in demand or supply.
The importance of market analysis and due diligence
As with any investment, it's crucial to do your market analysis and due diligence before investing in the trifecta. This includes researching the current state of the silver, platinum, and uranium markets, understanding the potential risks and rewards, and consulting with financial advisors or industry experts. For those with marginal means, there are A-grade analysts and investors freely sharing their insights on twitter. We'd highly recommend finding a handful of legends to mine for insights.
By taking the time to carefully consider your investment options, you can make more informed decisions and increase your chances of success.
In conclusion, the coming commodities bull market, with a focus on silver, platinum, and uranium, presents a unique opportunity for investors to profit. While there are risks and challenges to investing in commodities, there are also potential rewards, including diversification benefits, the potential for price appreciation, and high demand in various industries. To maximize your chances of success, it's important to diversify your portfolio, conduct thorough market analysis and due diligence, and consult with financial advisors or industry experts.
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Disclaimer: Investing in commodities carries inherent risks, and past performance is not a guarantee of future results