Stuff Your Turkey with Inflation — Not Gold

Nick Hodge
by Nick Hodge

Last week when I wrote to you the subject was: Why I’m Selling Some Gold Stock.

The junior gold ETF is down 11% since then. Gold’s down 4%.

Gold vs GDXJ

I told you I didn’t know if gold would fall all the way to US$1,800 — and that uncertainty was precisely why I was selling some gold stocks.

That decision feels good this week. 

Premium readers of mine feel even better as we rotated into non-precious metals that are now feeling love as commodities reinflate with a new Biden-backed clean metals narrative. 

Members of my monthly Foundational Profits learned on November 13th, for example, that: 

Electric vehicles, batteries, and cleantech are already a major investment theme and will get further support under a Biden administration. Many of the materials needed to support them have already been deemed “critical” by the U.S. and Europe — including antimony, which we just discussed.

Copper and nickel are coming back into play. And so is lithium.

But none of those offer the explosive upside of rare earths. 

That day we bought Fortess Value’s special purpose acquisition corporation (SPAC), which would soon take over MP Materials and the Mountain Pass rare earth mine. The stock was trading below US$14.00. 

My rationale was that:

When closed, the combined company will have an estimated $1.5 billion post-transaction equity valuation (with $525MM of net cash). Fortress Value currently trades with a market cap of $425 million — less than the cash it will have.

Here we are a week and a half later. Fortress Value has changed its name to MP Materials (NYSE: MP), and its shares have gone up as much as 75%. 

MP Materials

That’s good work if you can get it.

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These markets are in flux. 

The dollar can’t make up its mind where it wants to go. It’s actually lower over the past month but the inverse correlation to gold has disappeared — the yellow metal yielding instead to rising bond rates. 

That doesn’t mean the printing press is stopping. That doesn’t mean inflation is gone. 

Quite to the contrary, actually. 

It’s just manifesting elsewhere.

I hope you manifest yourself a wonderful Thanksgiving this week surrounded by those you love and care about — and are thankful for. 

Call it like you see it, 

Nick Hodge

Nick Hodge,
Publisher, Resource Stock Digest

Nick Hodge is the co-owner and publisher of Resource Stock Digest. He's also the founder and editor of Hodge Family Office, Family Office Advantage, and Foundational Profits . He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.

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