juniorbullalive wrote: Trigon to benefit with material holdings in copper,silver,lead,cobalt
Summary - In December, inflation hit a 40-year high and in January, consumer prices rose to the highest level since 1982. We have three commodity stocks to inflation-proof your portfolio.
- Raw materials are in short supply and inventories are depleted. Commodity stocks provide opportunity for investors to capitalize on costs that can be passed to consumers.
- Commodities tend to be defensive investments during periods of inflation as their products are often in demand.
- TRQ, AA, and SBSW are Strong Buys based upon our quant ratings, strong valuation frameworks, growing earnings, and pose to benefit from rising prices.
Bullish On Commodities There are several key drivers and
supply pressures behind the rise in commodity prices:
- Strong global market demand has resulted in many shortages of raw materials like aluminum, copper, gold, silver, palladium, and platinum.
- Transportation shortages including shipping containers and truck drivers
- Sharp increases in oil and chemical price increases
- Costs from Asia and Europe limit supplies plus the cost of importing raw materials. Geopolitical factors in the various areas and globally.
Record high prices and limited supplies push commodities to the top of the list as hedges against market volatility and inflation. In 2021, commodities were among the top performers. We’re experiencing many commodity futures in backwardation (the current price of a commodity is higher than its price in the futures market), which highlights the short supply, resulting in higher prices.
In a
Bloomberg TV interview, Goldman Sachs Head of Commodities Research, Jeff Currie, said, “I’ve been doing this 30 years, and I’ve never seen markets like this…This is a molecule crisis. We’re out of everything. I don’t care if it’s oil, gas, coal, copper, aluminum; you name it, we’re out of it.”
Shortage Everywhere (Bloomberg)
With commodity futures contracts trading in backwardation, 19 out of 28 raw materials from energy to agriculture are short-term trading with the expectation of a price move to occur in the near future. We have not seen this since 1997, as evidenced by the
Bloomberg visual above. Supply disruptions, pent up demand, rising interest rates, energy cost, and shortages of products and services are underpinning inflation and demands on resources