The markets are pricing in inflation following the Trump US Presidential Election Win. US stocks are soaring to record highs and the Dow is on verge of breaking 20k a major psychological level. Investors should be prepared for volatility as President Trump will counteract a lot of Obama’s moves over the past eight years and this could accelerate moves in many markets. Notice already US bonds are breaking down as capital is flowing to riskier assets most notably stocks and recently copper and energy. This is signaling to me inflation, rising interest rates and major policy changes which is already having dramatic effects on the average portfolio.
I am amazed that the US Dollar is still rising despite all bonds crashing. All fiat currencies except the US dollar are crashing. There are some places around the globe experiencing hyperinflation most notably Venezuela and India. Investors are dumping their foreign stocks and paper in favor of US Stocks and US Dollars. This artificially high US dollar could have a dramatic stress on borrowers who are having to pay back loans with expensive dollars. Most notably affected could be our US Federal Government already in record debt.
That is why we still love junior gold miners (GDXJ) and even more so silver miners (SIL) as Trump will not let foreign nations continue devaluing their currency to gain an advantage on the US. I expect Trump will do whatever he can to stimulate spending and growth to make America great again by putting capital into infrastructure. This should benefit the domestic steel, copper and energy sector.
In addition, Trump loves nuclear and I expect major investments will be made to update and expand our nuclear fleet of reactors. Investors should look to gain exposure to the Uranium Mining ETF (URA) as Trump may look to build our domestic nuclear sector as we can no longer rely on imports especially when we have millions of pounds of uranium in the Southwest US. There have been a bunch of small uranium miners raising money after the Trump win which may auger a bottom.
Continue following the tensions in the South China Seas with the recent stealing of the Chinese of a US military drone. Could China have taken that drone to see what rare earths the US in using to power and guide the advanced drones? All the metals which China has control of should be watched and you should get exposure. Focus on rare earths, graphite and other strategic battery technology metals such as scandium, graphite and cobalt. Trump has put in Peter Navarro as a trade advisor with China and the Chinese are already threatening a trade showdown. Hopefully Trump will move fast to help secure our own supply chain of critical metals as that is how the Chinese can squeeze the West.
Take a look at some recent developments in this sector which should be looked at for 2017. Please remember links are to sponsors and shareholdings which I could benefit from if the stock price goes higher.
1)Remember there is no current US production of flake graphite used in high tech batteries. This US junior graphite miner is working on a Preliminary Economic Assessment (PEA) that should be published by the end of January 2017 on the largest graphite deposit in the US. The deposit has 17.95 million metric tons of indicated resources grading 6.3 percent graphitic carbon and 154.36 metric tons of inferred resources at 5.7 percent graphitic carbon identified. The company has a unique spherical graphite which could perform well for batteries.
2)A near term fertilizer producer in North America just raised up to $11.8 million from a NY based asset management firm. This may be signaling smart money wants some exposure to fertilizer stocks as inflation increases. This will allow this junior fertilizer company the ability to advance closer to construction and help fill our supply shortage of sulfate of potash in North America. This junior has two major SOP projects with experienced management that can take projects into production.
3)Keep a close eye on this silver developer in the Golden Triangle in BC as they just raised $3 million CAD and got a new CEO Gary Cope who sold his prior silver company to silver producer Coeur D’alene (CDE) for $350 million. The grade of this silver is some of the top in the world and the new management believes this deposit is expandable. Smart investors should start looking at this situation. I recently participated in the private placement and the company is a sponsor.
4)The Yukon also has some of the highest grade silver in the world. Take a look at this explorer in 2017 as they are just beginning to explore next to silver producer Alexco (AXU) in Keno Hill which recently made a big discovery. The CEO has over 28 years of precious metals exploration experience spending some time as exploration manager at Placer Dome which later became Barrick. Placer Dome produced some of the greatest exploration geologists in the world. They are focusing on high grade silver in the Yukon in Keno Hill adjacent to silver producer Alexco (AXU) who produces silver from some of the highest grade ore in the world. Most silver comes from much riskier jurisdictions like Argentina, Bolivia and Mexico. Recently Kaminak a near term Yukon gold producer was acquired by Goldcorp as they search for production in mining friendly and geopolitically stable jurisdictions. Could some of the other big silver producers look to come into Yukon’s Keno Hill where some of the highest grade silver is found?
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