Metals Break Out On Hot CPI … Buy More …

Hey There Income Hunters,


The SPDR Gold Trust (Ticker: GLD) had the highest volume UP day since May. 


 We may look back on this week as the one the metals decided to front run the Fed …


This is the psychological shift to “the inflation genie is out of the bottle and the Fed will not get her back in.”  


The US Consumer Prices (CPI) rose last month at the fastest pace since 2008.


Social Security benefits in 2022 could see a roughly 6% increase in their payments—the largest since 1982—reflecting surging inflation during the pandemic.


The commodity, energy and metals bull market has a long way to go. 


Hopefully you have been jumping on the trades I have given you … 


Today I’ll review what’s been hot and where to expect the biggest moves ahead.


Uranium 


I have been preaching the uranium supply/demand imbalance for months:


(Yellow is supply, green is demand.)


Uranium is THE best solution for meeting the zero carbon emissions requirement. 


It produces the LEAST amount of carbon equivalent emissions, period:



The hard-push-to-renewables crowd (ESG) has created unintended energy demand consequences.


I recommended a Global Uranium Mining ETF (Ticker: URNM) call spread last week, and closed it on Wednesday for a nice 112% profit.



We may get a bit of a pullback on uranium; however, if URNM breaks out above the old high ($98.49) I will get back in.


Copper 


On Monday I said I thought copper would begin a rally to the old highs and recommended buying Freeport-McMoran (Ticker: FCX)


And Wednesday just happened to be a great day for FCX, breaking above both the downtrend resistance and the 200-day moving average (DMA) on higher than normal volume:



I purchased the FCX Dec12 39/40-strike call spread for $0.23.


Finding tight call spreads that give you a great low risk/high reward ratio really maximizes your gains.


I would stop the trade out for a max 25% loss. That means you are risking $6 to make $94 … In other words, you can make 15x what you are risking …


Gold 


I think gold is ready to look ahead of the Feds taper talk. In the past, when inflation was rising faster than bond yields into a Fed taper, gold started rallying and never looked back …


This is because the taper historically weakens the stock market and the Fed has to reverse course and resume quantitative easing measures.


I don’t think this time will be any different …Last week I suggested a trade recommendation to buy the VanEck Gold Miners ETF (Ticker: GDX)


An ideal breakout above the 50 DMA on above-average volume should catapult GDX higher:



I bought the Dec17 32/34-strike call spread for $0.55.


Hopefully you jumped on GDX already, but if not consider the Dec17 34/36-strike call spread for $0.47. Stop yourself out at $0.35 to limit your risk to a 25% loss.


Your max revenue would be $200 (difference in the strikes) minus the $12 dollars of risk (25% of $0.47 * 100) …


This means you are risking $12 to make $188 for a 15x return on risk.


That is how you maximize your returns!


Bring It Home …


There is tremendous upside potential for commodities, metals and miners because the Fed cannot stop inflation, and the government might push it further because they MUST spend …


The 1970s are not a useful comparison to today because in the 70s, the US had very little debt.


Today, our debt levels are so high that the Fed would cause a debt crisis if they raise rates, so first they must hold interest rates down and let the government continue to spend.


It’s the most bullish scenario you can imagine.


Be aggressive and as always …


Live and Trade With Passion My Friends,


Griff

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