Here is Your Next Decade Long Play

The urgent question of the day is WHICH stocks do you buy and forget about for good?

The answer is very simple. You buy cheap ones. And what are the cheapest stocks out there?

Commodity stocks.

My friend, Jim Umpleby, said that we are just entering a ten-year super cycle in commodities.

Jim should know. He is the CEO of Caterpillar (CAT), a company I have been following for 50 years. I even have one of their cool worn yellow baseball caps from years past.

Needless to say, the global commodity shortage has created a stampede to buy the company’s heavy machinery.

Industrial commodities are in fact the perfect sector to buy right now. Take a look at the long-term chart for copper prices, which are a great bellwether for the entire industry. They are imminently poised to make another long-term upside breakout.

Copper last peaked at the beginning of 2011 when the Chinese infrastructure build-out suddenly outdrew to a juddering halt. Prices cratered from $4.60 a pound to a lowly $1.90. Mines were sold off, mothballed, or permanently closed at a record rate.

Copper prices fell so low that the US Mint finally started making a profit on pennies they struck.

Then a funny thing happened.

Copper prices were assisted by the global synchronized economic recovery that resumed in 2023. The share prices of copper and other major commodity producers have gone ballistic.

Freeport McMoRan (FCX), the world’s largest copper producer, (whose management is a long-time reader of this letter) has just seen its stock jump from $33.50 a share to $38.49. I expect it to someday reach $100.

You may think that it’s too late to get into the commodities space, but you’d be wrong. Having covered the sector for nearly a half-century, there is one thing you learn quickly. While you can shut down a mine in weeks, it can take years to bring them back online.

As for developing a new mine from scratch, that can take a decade by the time you get to design, permits, infrastructure, equipment, and labor in place.

My Australian readers tell me that (BHP) is flying young skilled workers from Brisbane an incredible 2,000 miles to work in Northwest mines in a six-week on, six-week off work schedule and paying them $200,000 a year to do it. And they’re making a profit doing this!

The bottom line here is that a short squeeze has developed for industrial commodities which will last for years.

Oh, and that global economic recovery? It is on vacation until investors get a sniff of the first interest rate cut in five years. That could happen in a few months.

At least you have something to buy now.

 

 

 

 

 

Commodities Are In Our Blood