Hey There Income Hunters,
With the easy stock rally behind us, it’s more critical than ever to pick your spots in the right sectors to bag consistent winners.
I’ve been banging the drum on the energy sector recently and on Sunday suggested a trade in the Energy Select Sector SPDR Fund (Ticker: XLE).
Well, it was up big yesterday and is ready to break out above the 50-day moving average …
And there’s still time to jump on that for a move to new highs by the end of the year.
Today I want to steer you toward an additional sector and a stock that’s ready for a serious move higher …
It’s Time to Dig in on Newmont Corporation (Ticker: NEM) …
NEM is a very profitable company, generates plenty of cash flow and throws off triple the dividend of the S&P 500 …
Here’s the gold story …
Gold should be higher based on where real interest rates are.
Gold would be higher if the Fed didn’t brainwash the average investor into thinking the central bank can control inflation.
It will be higher as the Fed and US government are forced to start printing money again in 2022.
NEM the Right Stock at the Right Time
NEM has a market capitalization of $45 billion. The company has assets spread all over the world and produces gold, silver and copper — and lots of each. Plus there’s a strong balance sheet with net debt of just $800 million …
Check out the fair Power Income fair value price for NEM …
Don’t Miss This: Nemont is trading at an over 40% discount to fair value.
Now remember, $81 is the fair value based on gold hovering between $1,650 and $1,850 …
That means there is plenty of upside if, as I expect, US growth slows below the long-term growth trend of 2% and forces the Fed to power up the printing press while inflation remains well above 2%.
NEM’s Technical Position
Yesterday’s candle is a doji, as confirmed by Option Pit’s Queen of the Candlestick Licia Leslie.
And the doji signals a reversal in trend.
NEM, it should be noted, is undervalued based on its ratio to the price of physical gold.
I am looking at buying the NEM Nov. 19 60/62.5 call spread.
By tomorrow’s open we will have the CPI number, which could move the market.
Bring It Home
We are heading into the most exciting part of the year, and I want to add to my commodity holdings because I believe we will see a rally in inflation assets.
With gold and the miners I respect the fact that until we clear the $1,830 area on good volume, we are still stuck in a range.
That is why I am focused on betting on profitable quality miners that are trading at a discount.
Live and Trade With Passion My Friends,