Rachel’s note: During the COVID pandemic, the world experienced extreme supply chain shortages.
Because of this, we ran into empty shelves at grocery stories, skyrocketing prices at gas stations, and massive unemployment.
Thankfully, these conditions are in the past now. But just because we’ve managed to bounce back in many ways, that doesn’t mean that supply chains aren’t still feeling the pinch.
The lagging effect is only beginning to show for some industries. Companies are dealing with all-time low inventories of raw materials, which go into most products from equipment to advanced technology.
Today, Casey Research colleague and financial journalist Nomi Prins breaks down two necessary metals that will experience shortages in 2023… and what that means for your money.
By Nomi Prins, editor, Inside Wall Steet with Nomi Prins
“Coronavirus: Supermarkets ask shoppers to be ‘considerate’ and stop stockpiling.”
This was a typical headline in early 2020.
Most of us felt the impact of COVID shortages. We felt these primarily at grocery stores, pharmacies, and gas stations.
It was like a nightmare − empty shelves, skyrocketing prices, and massive layoffs.
Thankfully, we’re back to some normalcy. No more long lines, six-foot distancing, and mandatory masks.
It seems like the worst is behind us… but today I want to show you how another round of deficits is coming.
This will be worse than a toilet paper shortage because it will affect your financial future… and the time to get ready is now.
My regular readers know that I worked on Wall Street for 15 years before I left to become an investigative journalist. I’ve now published seven books, the most recent being Permanent Distortion.
In this latest book, I help make sense of the wild distortions we’re seeing in the markets today – and their root causes of greed, easy money, and the Fed’s stupidity.
And today I’m seeing something else I can’t ignore. An investment opportunity that can either help make you a fortune… or lead to massive losses for those who ignore it.
That’s why I want you to get ready before the news hits the mainstream media.
Where Will We See Shortages?
The pandemic completely crippled the supply chain.
Businesses shut down. Shipping rates reached an all-time high, and inventories went to a nearly all-time low.
Luckily, this brutal economic condition didn’t last long.
In less than two years, we have bounced back in many ways… meaning we can get what we need from grocery stores, and most of our day-to-day items are available again.
Yet, the lagging effect of distortion in the supply chain is only beginning to show for some industries.
Companies that sell tangible goods rely on raw materials. They can’t produce heavy equipment, tools, or even vehicles without a steady supply of these materials.
I’m talking about hard assets – metals, energy commodities, and agricultural resources. Most of these have all-time low inventories in the leading global trading houses.
One of those important metals is copper.
Copper has great conductivity and is widely used in all kinds of wires – for regular electronics to complex high-tech devices. Also, pipes and other construction materials due to its strong corrosion resistance.
But take a look at the chart below. You’ll see copper inventories at the London Metals Exchange have been on the decline since mid-2013. This exchange is the most important in the world for industrial metals trading.
And then there’s nickel. Nickel is mostly used to make stainless steel, a key construction material.
In recent years, nickel also became a vital part of lithium-ion batteries. These power a wide range of devices, from smartphones to electric vehicles.
But take a look at this next chart below. It shows that nickel is down significantly since 2015.
In 2015, inventories reached 470,000 tonnes. Today, there are only 54,000 tonnes at the London Metals Exchange.
That’s a giant 88% drop in over eight years.
These key metals face massive deficits – some of the worst we’ve seen in decades.
This is a lagging effect of the economic distortion that started during the pandemic.
In the last two years, almost no one has been developing new mines… or searching for new copper or nickel projects. A lot of miners halted production during the pandemic, too.
Also, mining and smelting are power-intensive. And the Russian-Ukraine War led to a massive rise in energy costs. Some miners were forced to shut off their operations until energy prices returned to normal.
This has created a gap in the supply chain that we’re now facing.
And thanks to the U.S. government, that gap could get even bigger over the next few years.
Last year, the White House signed a $1.2 trillion infrastructure bill. The funds will go toward updating highways, bridges, power grids, energy storage, and much more.
Most of these require significant volumes of raw materials – including nickel and copper.
By 2030, research agency McKinsey & Company estimates massive supply gaps for these two metals:
Nickel – Up to 1.7 million tons, or enough to cover 8 years of U.S. demand
Copper – Up to 7 million tons, or enough to cover 5 years of U.S. demand
Low inventories, lagging supply, and growing demand are all part of the shortages we’re about to face. I’m predicting a bull market in commodities… and prices will spike one after another.
What This Means for You… and for Your Money
Bloomberg predicts commodities prices will jump by 43% this year.
I actually think this number will be even higher if we bet on selective metals… Particularly those with low inventories and fast-growing demand.
And if history is any guide, the companies that mine these metals could deliver even bigger profits.
Not all miners will succeed, though. Some will fail to crystalize value for their investors, while others will have odds in favor of outpacing the sector.
It’s not an easy task to find the winners and avoid losers. Like I’ve shown you in the last few days, you have to follow the money, and it starts in Washington.
I believe that D.C. has already chosen who will be this year’s biggest winners and losers. And there’s a way to profit from both.
To prepare for these shortages in the commodities sector, my team and I have developed a unique investment strategy.
This strategy can help you identify the best companies in the sector and profit from this selection. No matter which way the economy turns in 2023, high or low interest rates, recession or not.
It’s part of a strategy that I used during my days on Wall Street.
Editor, Inside Wall Street with Nomi Prins