How to Profit from the Accelerated Rush into Commodities

The war against Ukraine continues. 
 
The invasion has turned into a full-scale assault on the people of Ukraine that has resulted in the displacement of millions, death of thousands. 
 
It’s also led to an accelerated rush into commodities.
 
The rush into real things like real estate, gold, food — and commodities across the board —  will continue indefinitely and though I see the war headed in the wrong direction (escalating) I also see an opportunity to profit.
 
Like the Fed — who we will talk about shortly — politicians who have long ignored the most basic supply/demand fundamentals are now calling for the shutting down of imported Russian uranium and for an increase of U.S. production.
 
On March 8, President Biden announced he would bar U.S. imports of Russian oil and gas and energy. Rumored bans of uranium imports have led to an increase in the spot price of uranium to the $60 level — an 11-year high.
 
Senator John Barrasso of Wyoming has called for shutting down all imports of Russian uranium. That bill comes as the Biden administration weighs sanctions on Russian nuclear power company Rosatom — a major supplier of fuel and technology to power nuclear plants around the globe. 
 
Better late than never. But late is going to cost everyone a pretty penny and before it’s all said and done we will see uranium prices surge above the $200 level. 
 
Two steps forward, one step back. That’s been my guidance as to how the uranium equities would trade for the foreseeable future. 
 
On the macro side, Jerome and his merry group of academic geniuses decided to raise rates 25 basis points as I told you the Fed would. 
 
The US 10-year bond yield has now surged to the 2.50% level, sending mortgage rates, gold, and the dollar higher right along with it. 
 
Bitcoin is back above $45,000.
 
Higher mortgage rates coincide with record home price appreciation here in Texas where I live. As in 50% year-over-year.
 
U.S. 5-year and 30-year Treasury yields inverted for the first time since 2006. Not sure if y’all recall what happened a few years later. But I’m sure it’ll all be ok.
 
For those not keeping track, a steepening of the yield curve signals multiple rate hikes and a recession to accompany it may actually materialize. I’m on record saying I don’t believe the market will allow more than two hikes but we’ll see. 
 
If the Fed does get aggressive about fighting the inflation they didn't see themselves causing and they hike into a slowing economy then you should prepare to see further declines for a few quarters in the major indices.
 
You already know the endgame if the Fed does hike. It’ll be covered by more — not less — quantitative easing (QE) when something in the market breaks.
 
Consecutive rate hikes to tame inflation causing a recession will be interesting to watch as midterms are right around the corner.
 
Nothing inspires confidence like a recession coupled with people looking at their 401ks only to see they have less there halfway through the year than they did when the year started.
 
For institutions and pension funds that have mandates to perform that means finding undervalued sectors that can provide sufficient enough returns to make up for consecutive quarterly declines. 
 
Think the gold sector, think lithium, think uranium, think copper.
 
While the major U.S. indices and the funds that invest in them struggle, our portfolio will continue to outperform. 
 
Make sure you’re positioned. 

Let's get it!

Gerardo Del Real
Editor, Resource Stock Digest