We’re on the verge of a huge commodities boom.
Fundamentals for metals, energy, agricultural products, and industrials like iron ore are primed for takeoff.
And I’m positive that the end of the U.S.-China trade war will launch them into the next supercycle.
As I outlined over the last several months, the trade war’s end is a near-certainty – and it’s going to kick commodities into overdrive.
I even had a date – November 17. That was when President Trump and Chinese President Xi were scheduled to meet at the Asia-Pacific Economic Cooperation (APEC) summit in the South American nation of Chile.
It would have been the perfect time to announce a trade deal. We all know President Trump loves big shows, and the APEC summit is one of the biggest on Earth.
But that big event got interrupted by an even bigger one.
Chile imploded. A million protesters took to the streets of the capital, Santiago. Things turned violent. A good chunk of the government was forced to step down.
Chile’s government canceled the APEC summit due to the riots. It was an incredibly drastic move. But officials didn’t want the world showing up to find Santiago burning.
I want to be clear… The fact that the APEC summit was canceled in no way affects my call on the end of the trade war.
In fact, for reasons I’ll outline below, the unrest in South America is only making me more bullish on commodities… and on one metal in particular…
Let me explain, starting with the trade war…
The Trade War Is About Politics
The end of the trade war will be a huge catalyst for commodities. And I’m convinced there is an announcement coming – we just don’t know exactly when or where.
I suspect it will be very soon. That will give President Trump almost a full year to tout his “win” to the electorate.
Truth is, I don’t think Trump really cares about the trade war with China. I don’t think this is the molehill he wants to die on.
But he knows it’s putting enormous pressure on U.S. farmers, for example… who are a huge voting bloc. So imagine if he can step in, right as they’re ramping up election season, and say, “Hey, we’ve solved the problem. China is good. Exports are back on.”
The boost in popularity would be notable. I mean, I don’t see why he wouldn’t do that.
Probably, the announcement will come at the next high-profile event where the U.S. and China come together.
As we go to press, Bloomberg is reporting that Trump has signed off on a “phase-one” deal with China. The U.S. will scrap plans to add tariffs on $160 billion worth of Chinese goods, and in exchange, China will buy more agricultural goods from the U.S.
This is a positive sign. And no matter what kind of final deal they eventually hammer out, the end of this conflict will propel metals prices higher. Because worries about the trade war are the biggest thing holding commodities back right now.
Here’s the thing: The performance of industrial metals is linked to economic growth. The trade war has made investors skittish on the world economy. So whenever metals like copper or zinc try to rally higher (which the fundamentals say they should), investors sell into the strength.
Once the trade war’s over, it’ll be off to the races for these key metals. Investors will be euphoric about the global economy again. Combine that 180-degree turn in sentiment with strong fundamentals for metals like copper – and you’ve got an explosive setup.
And speaking of copper, there’s something else you need to know…
Uncorking the Champagne Bottle
Getting back to the implosion of Chile… Let me add some more fuel to this commodities boom fire.
The uprisings in Chile are even bigger news. That’s because the country is, by far, the world’s No. 1 producer of a critical industrial metal: copper.
Chile supplies nearly 30% of the world’s copper.
Could the riots affect production? You bet.
Workers at Chile’s Escondida copper mine – the single largest source of copper on Earth – already launched “sympathy” work stoppages in support of their comrades rioting in other South American countries, like Argentina.
Now, remember: The U.S.-China trade war is going to end soon.
That’s going to vaporize, overnight, the wall of worry weighing on base metals. It will be like uncorking a bottle of champagne.
Now just picture what happens if the trade war ends and the world’s largest copper nation implodes at the same time.
Investors will trample each other to buy copper companies.
The riots are going to be very tough for Chileans. But it’s critical to recognize the impact beyond the country. How Chile’s copper sector goes, the world copper price goes.
I believe that this trend in copper is setting up one of the biggest opportunities in junior stocks.
Remember, the world’s top copper producer – Chile – is literally in flames. The trade war is going to end, and the world will suddenly find itself short on copper supply.
Plus, there are already signs of a coming supply squeeze in copper. Last month, copper smelting companies slashed the prices they charge miners to process copper ores. Insiders say smelters are cutting processing fees to try and suck in all the supply they can.
The world’s biggest mining companies are also betting big on copper. In early December, leading miner Rio Tinto announced it will spend $1.5 billion to expand copper mining operations in Utah. The New York Times said Rio Tinto and other miners are in a “frenzy” to lock up copper mines.
Copper buyers and producers are both kicking into overdrive. I expect it won’t be long until investors do as well.
At Casey Research, we’re smart speculators. This story is flying under the radar of most investors… Even insiders don’t know about this…
Which is why you turn to us.
If you’re an International Speculator subscriber, you can catch up on how we’re perfectly positioned to profit here.
If you’re not, an easy way to play this is by buying the Global X Copper Miners ETF (COPX). It’s a basket of copper mining companies that can give you exposure to this trend as it takes off.
Just remember to treat any bet on copper as a speculation. And never bet more money than you can afford to lose.
Keep walking the path,
Editor, International Speculator
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