Hey There Income Hunter,

Commodities have picked up steam the past couple of days as the market wakes up to the fact that inflation will not be trending lower any time soon.

European natural gas prices continue to move vertically higher along with broader electricity prices – and Europe has not come up with any near-term solution yet.

While the US may not see such a spike, we can certainly expect a narrowing of US and Euro natural gas prices. More importantly, the world is going to realize gas is the cheapest and most efficient energy option.

Crude oil may have already bottomed and a break above $95 will bring a lot more cash into the black gold.

We may have also seen the bottom in fertilizer stocks and soft agriculture including wheat and corn.

The rally also hit miners yesterday.

Today we will take a look at a couple of commodities to focus on for excellent risk/reward opportunities. 

Intrepid Potash Inc. (Ticker: IPI)

IPI produces potash, a commodity that is essential if the world, collectively, is going to be able to overcome severe food shortages.

Potash is an essential ingredient for the agricultural industry as a fertilizer input. It is also a component of oil and gas drilling fluid, and a nutrient supplement in the animal feed industry.

What can’t it do!

IPI produces and delivers the final product and the majority of the company’s revenue is generated in the US. The firm’s production facilities are based in the US, as well.

In today’s new world of deglobalization, products produced and delivered from end-to-end in the US are a very valuable entity …

As you can see in the chart below IPI was up 12% yesterday, and the high volume rally came right out of the highest volume profile bar on the left. This is indicative of a new distribution to higher prices.

We may get a pullback and I am looking to buy that. The stock is trading at a 50% discount to price and once it breaks above 55, we could see a quick run higher.

Teucrium Corn Fund (Ticker: CORN)

Corn also had a great day yesterday. Notice the chart below showing a high volume rally away from the 50 dma (blue line). 

Corn has the potential to test recent highs at $30 and possible old highs at $60, as shortage fears increase.

Bring It Home

I believe the turn is here in commodities. Traders will want to have a good mix of industrial metals (copper, platinum, silver) and soft commodities (wheat and corn) and miners, as well.

The markets are in transition back to stagflation, meaning low growth and high inflation, as we head into the winter months.

Traders should want to get in as momentum is building.

I think the Fed will reiterate its commitment to fight inflation, but global demand for food and energy will keep a floor below inflation for longer.

We may get a pullback on IPI and CORN in the short-term, and that is an opportunity to build a position into October, which I believe will give traders time to catch the next leg higher. 

Live and Trade With Passion My Friend,

Griff