Justin’s note: Last week, commodities expert David Forest showed us why commodities are primed for their biggest rally in 50 years.
Dave, as you know, is our go-to guy when it comes to natural resources. He’s spent the last two decades of his career searching for new discoveries and breakthroughs in the resource space. He also helped develop what would become the sixth-largest platinum-producing district in the world… discovered over one billion pounds of copper in Asia and South America… and became the first to be granted a modern exploration license in Myanmar’s emerging economy.
In short, when he talks… it pays to listen. And today, he shares another reason why the commodity rally could begin any day now… and why today is the perfect time to take advantage…
By David Forest, editor, International Speculator
Imagine you could sit at the boardroom tables of the world’s largest mining and energy companies.
If you could listen to their industry intelligence, you’d have access to all the reports from the front lines of the commodities business around the world.
Imagine you could be privy to information on when a commodity is about to soar. You could invest ahead of the herd and make millions when a depressed sector roars back to life.
This is exactly the sort of thing that happened in the early 2000s. Starting in 2003, the Commodity Research Bureau (CRB) Index emerged from years of slumber and began to climb upward.
By 2008, the index had notched a stellar 222% gain from its 2002 low.
And that index is made up of some of the largest resource stocks on the planet. During the epic 2002-2008 commodities run, many junior stocks gained many times more than the wider index.
A standout example was Paladin Energy. In 2002, this stock was a tiny, unknown developer of uranium mines. The company traded at just 3 cents per share.
But during the commodities boom through 2007, Paladin Energy caught fire. The stock soared to $7.82. That’s a 260x lift – or a 26,000% gain.
The thing is, those kinds of commodity upcycles have happened reliably throughout history.
And you don’t need the inside intel from mining boardrooms to know when they’re coming.
You just have to watch what those big companies do.
You see, my team and I studied historical indicators that showed when commodities markets were setting up for a big move. And we found that the world’s largest resource firms usually send strong signals when they see markets setting up for a powerful cyclical move higher.
When the world’s biggest firms believe a commodities spike is coming, they try to get positioned for maximum growth. Usually that means they go out and buy smaller companies – which are usually selling cheap after years of depressed commodities prices.
The result is a spike in mergers and acquisitions (M&A) that comes shortly before a big move higher in commodities prices.
Below is a chart my team and I compiled showing the value of all M&A transactions – and equity financings – in mining yearly since 1990.
Here’s the interesting thing. If you look closely, you’ll see that an uptick in money flows took place in mining during 2001 and 2002. You can see how cash coming into mining increased, even as the commodities markets as measured by the CRB Index were falling.
For two years, insiders stealthily increased their purchases of mining investments. Then… bang! In 2003, the CRB Index started rising and the wider investment community piled into resource stocks.
You’ll also notice that money flows peaked in 2007, just before the end of the last big commodities cycle. There was a brief resurgence in 2010, and then money flows died down as commodities entered a downturn.
Money flows stayed subdued through 2017. But last year, something intriguing happened: In 2018, total flows into the mining sector rose notably, to $183 billion.
That grabbed my attention. But I’ve become even more convinced that something big is afoot in commodities during the first few months of 2019, with recent events suggesting the $183 billion in money flows in 2018 will be dwarfed by money flows into mining in 2019.
The current year in mining M&A got off to a big start when major gold miner Newmont Mining announced a friendly $10 billion takeover of fellow major Goldcorp.
But that megadeal was eclipsed in February – when the world’s largest public gold miner, Barrick Gold, jumped into the takeover fray.
On February 25, Barrick unveiled a hostile bid for Newmont, worth around $23.2 billion. That’s a huge bid – as you can see in the chart below, it would be the second-largest M&A deal seen in gold during the last decade.
Between Barrick, Newmont, and Goldcorp, the world’s top gold executives tabled nearly $28 billion in deals within the span of a few weeks.
And while the Newmont-Barrick deal didn’t go through, shareholders voted in favor of the Newmont-Goldcorp transaction. And the new entity created a joint venture with Barrick in Nevada – largely as expected.
The bottom line is, just a few months into 2019, we’re on pace for a significant rise in this critical metric. And historically, that’s meant massive profits coming during a cyclical upsurge.
The massive amount of money involved here shows that mining executives see something happening in the gold market.
Following trends like this set by big industry insiders has historically been a recipe for profits.
I expect 2019 to be a pivotal year for commodities, and today is the perfect time to get positioned.
Editor, International Speculator
Justin’s note: As Dave showed us, now is the time to bet on commodities before it’s too late. And to see which specific commodity has the most upside, I recommend you watch his urgent video presentation.
In short, Dave says we’re about to witness the birth of a brand-new, $9.6 billion market.
And today, you can get in on the ground floor.
If his projections are correct, you’ll be able to turn a small stake into $50,000 – maybe more.
In this short video, he explains everything you need to know about this opportunity… including how to position yourself for the biggest gains possible. For reasons you’ll soon discover, this opportunity won’t last long… So please pay close attention.
High praise for our recent interview with Dave, “Buy These Two Key Metals Before the Coming Surge”…
Excellent piece! The hysteria over nuclear energy began with that silly movie, The China Syndrome. Millions of people watched in horror as the world was coming to an end over a vibration. Unfortunately, for too many people, fantasy is stronger than the truth.
– Paul Dawson
As always, send your questions, comments, and thoughts to [email protected].
Former money manager E.B. Tucker is revealing a unique security that could make you 1,000%-plus gains in 2019.
It’s something E.B. calls “premium shares.” And no, it’s not cryptos, stocks, or options… but you can make huge gains on big and small companies alike.
E.B. shares everything you need to know in what we’re calling the “Stock Market Escape Summit,” which you can watch right here. But keep in mind, this opportunity won’t last long. Learn how to get in on 1,000% gains before we have to take this video down.