I hope all the dads doing it the right way had a great Father's Day. As I like to say, we brought the kids here, they didn't ask to come. Act accordingly.
Back to resource stocks.
Yesterday, June 17, 2018, Australia's South32 (S32:AX) bid $1.3 billion for 100% of Arizona Mining (TSX: AZ).
Arizona Mining is developing zinc, lead, manganese, and silver assets in Arizona.
The offer translates to C$6.20 per share, which represents a 50% premium to the company's last close.
South32 recognizes where we are in the cycle and knows this is the time to buy, not sell. It added that it continues to be on the hunt for attractive assets.
The deal is expected to close in September and is the latest example of the disconnect between the share price of quality commodity assets versus the real value.
It's a message I've been pounding on the table about for all commodities, but don't just take it from me.
DoubleLine Capital Chief Jeff Gundlach, known as the "Bond King," who manages nearly $120 billion in assets, also sees a massive commodity rally on the horizon.
Considering he has outperformed 92% of his peers over the past five years, his insight is well worth listening to.
Like Ray Dalio, Gundlach believes we are late in the business cycle (nearly a decade of economic expansion supports their views).
This isn't the first time I've cited Gundlach and for good reason.
Along with consistently outperforming his peers, he - like Ray Dalio - has one of the best research teams on the planet available to him.
Gundlach also gives some very fundamental reasons why - as I've been saying - now is the time to position for the coming commodity rally.
He cites the fact that every recession in the U.S. (typical of the late stage of the business cycle) since 1970 has been preceded by a raging bull market in the commodity space that has led to spectacular gains.
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How spectacular? According to Gundlach - and history - up to a massive 400%.
Gundlach points to four specific points that he sees as extremely bullish for commodities:
Increasing global activityRecent U.S. tax cuts"Absurd" stimulus policies from the European Central BankA weakening U.S. dollarWhile the prices for commodity producers are historically cheap, the leverage provided by the juniors when the market turns will be life changing for many.
You've heard the cliche "the trend is your friend," and that's really the point of this entire article.
All newsletter writers - including yours truly - are really just momentum chasers waiting for a bull market that makes us look smart for a few years and makes subscribers a lot of money in the meantime.
That doesn't mean you can't make money in a bear market, but nobody is in this business to try and outsmart a bear. We're trying to ride a bull for a few years and do well enough for subscribers to be able to proudly put it on our resum?? for a few decades.
Here at the Outsider Club, founder Nick Hodge has brought together a merry band of misfits (my term, not his) who can give you exposure to a variety of sectors ranging from those that are already in a bull market - like Jimmy Mengel's Marijuana Manifesto - to services like my own - Junior Mining Monthly and Junior Mining Trader - that work to deliver enough winners to get you by, while positioning the high-risk/high-reward side of the portfolio should catalysts of significance line up with the right market.
So what do you do? It all depends on your risk tolerance and your timeline.
If I were an accredited investor and had to pick one service I would subscribe to Nick's Notebook.
It provides access - through Nick's extensive network - to financings for private and public companies from every sector imaginable.
The service was one of the first of its kind and the returns have been nothing short of amazing.
The leverage that many of the deals bring - by way of warrants - in a bull market will turn the consistent triple-digit gains into consistent four-digit winners. Mind you, there's four-digit winners in there already.
I encourage everyone to look over the many premium publications available and see which, if any, line up with what you're looking for.
Or don't subscribe to any of these services, but please do yourself a favor and research past commodity cycles, compare them to where we are today, and find a way to gather as much information as possible on your preferred commodity. Whatever it is - lithium, cannabis, copper, gold, or uranium - there's a lot of money to be made in the coming years.
When it's all said and done, many of us will be reminding you of the gains we'll make for decades to come, and hopefully you will have come along for the ride.
To your wealth,
Gerardo Del RealEditor, Junior Mining Monthly and Junior Mining Trader.
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.