An asset that can help play defense against inflation… it can also be an offensive play, riding the electric revolution… how to play it

 

We begin today with a quick “thank you” to everyone who joined Luke Lango for his 10X Anomaly Summit yesterday.

It turned into a huge event, with thousands of investors learning why Luke believes we’re on the cusp of a multi-year tech bull market that will send select, cutting-edge technology stocks up 10X.

The tech breakthroughs Luke sees coming are incredibly exciting…and could completely transform your portfolio and financial life. If you missed the event, no problem – just click here to watch a free replay.

Turning to today’s Digest…

***Older investors may recognize “trust but verify” as the phrase President Reagan used in the 80s

It was his slogan related to the possibility that the Soviet’s wouldn’t comply with arms-reduction measures outlined in the INF Treaty.

Basically, Regan’s plan was to “trust” that the Soviets were following through, but “verify” it with extensive fact-finding, confirmation efforts.

Today, investors face an economic climate in which “trust but verify” would be a wise approach.

I’m talking about inflation.

News out this morning is that consumer prices jumped 5% in May, topping the expected 4.7% forecast. This 5% number is the fastest rate of inflation since the summer of 2008…just before the financial crisis.

In recent months, Fed officials have done their best to deliver a unified message on inflation – it’s going to be temporary, there’s nothing to fear here.

But as any macroeconomist will tell you, when a substantially-increased volume of currency suddenly floods a market and chases after the same quantity of goods and services, inflation is a reasonable bet.

Given this, today, let’s “trust but verify” the Fed.

In other words, let’s take them at their word, trusting that inflation will be tame. But until time has verified that this as the actual outcome, let’s put some money into an asset that should treat us very well regardless of whether the future holds muted or robust inflation.

We get this “best of both worlds” outcome because today’s asset enjoys two tailwinds: one, the massive demand for electric vehicles and energy storage systems in general; and two, a world awash in recently-printed currency, which is behind our inflation fears.

Bottom line, this is a “heads we win, tails we win” investment set-up.

Let’s jump in.

***Big returns from battery metals – Part II

The asset we’re delving into today comes courtesy of InvestorPlace’s macro investment expert, Eric Fry.

For newer Digest readers, Eric is the analyst behind Investment Report, and probably the most successful investor you’ve never heard of.

In 2016, some of the world’s best money managers and stock pickers, including Eric, participated in an annual investing contest. Leon Cooperman, David Einhorn, Bill Ackman…

Eric beat them all. He posted a one-year gain of 150%.

Beyond that, over his career, Eric has dug up 40 different 1,000%+ returning investments. Most investors never get one.

Returning to today’s asset, you can think of it as the follow-up to an investment Eric recommended about a year-and-a-half ago.

Here’s Eric with more:

Back in January 2020, I made some “crazy” predictions about the copper market. As it turns out, however, those predictions weren’t nearly crazy enough.

I told readers of my Fry’s Investment Report letter that I believed copper was on the verge of a major upside move for three major reasons…

• Copper supply is falling short of demand, and this supply deficit is likely to grow much larger over the coming decade.
• Improving international trade relations, especially between the United States and China, will boost copper demand.
• The global boom in electric vehicles and energy storage could cause a major surge in copper demand…

Eric’s call was spot-on.

From the 2020 bottom through its recent top, copper was up over 135%. During the first half of 2021 alone, copper prices rallied as much as 40%.

To benefit from this, in January of 2020, Eric put his subscribers into copper mining giant, Freeport-McMoRan (FCX). When Eric analyzed and recommended the company, he speculated that FCX could make investors 100% on their money as copper surged.

He was wrong…

FCX climbed 200%+, as you can see below.

Today’s “trust but verify” asset is related to copper, a bit like “part 2” of the battery metal surge.

Here’s Eric to set the stage:

While copper prices seem to have cooled off for a while due to weakening demand in China and other factors, I think we’re still in the early stages of a years-long “supercycle” for many commodities.

But at this point, the word is out on copper and Freeport.

Therefore, I now want to focus your attention on my latest under-the-radar battery metal recommendation today…

***The next big battery metal for the electric revolution

As we’ve detailed many times here in the Digest, electric vehicles and energy storage systems are the future.

Pew Research Center data finds that though only 7% of U.S. adults own an electric or hybrid vehicle, 39% – nearly two-fifths – say they’re “very” or “somewhat likely” to seriously consider buying an electric vehicle in their next purchase.

But electric vehicles are just one part of the electric revolution. Efficient energy storage systems are a critical part of building a clean-energy future. That’s why the growth of these systems is exploding.

Last year, a record of roughly 1.2 gigawatts of storage were installed, according to Wood MacKenzie, a natural resources research and consulting firm. That number is projected to soar over the next five years, rising to nearly 7.5 gigawatts in 2025.

Like copper, today’s asset is riding this wave of adoption.

So, what is it?

Back to Eric:

While copper plays a huge role in the proliferation of electric vehicles, there is another key element that needs to be pulled out of the ground for the EV revolution.

That element is vanadium, which is key to an innovative technology called the vanadium-redox flow battery (VRFB).

For energy storage applications, they offer a compelling alternative to lithium-ion batteries… especially when one considers their environmental superiority…

Although VRFBs remain relatively unknown, they are attracting a growing worldwide demand.

And for good reason. They offer many benefits…

They last about three times longer than lithium-ion batteries… they can perform for more than 20 years with close-to-zero degradation, whereas lithium-ion batteries tap out after five to seven years… they can be charged and discharged repeatedly without any significant drop in performance (unlike lithium-ion batteries) … and, at the end of their useful lives, they are relatively easy to recycle, whereas lithium-ion batteries are not.

***And what about the inflationary aspect of a vanadium investment?

That’s the easy part – with vanadium, you’re getting your money out of the depreciating dollar, and into a hard asset that can retain its value.

Want to see what this wealth preservation looks like?

Below is the CRB Index. It tracks a basket of commodities, with about 13% being allocated to base/industrial metals.

Look at the near-vertical climb of the index since March of last year (circled).

The index is up about 80% since that March low. And as you can see in the chart, if we’re following past supercycles, there are still huge gains ahead.

Plus, remember, this return from the CRB Index represents a diverse basket of commodities, not just battery metals. As noted earlier, copper has climbed as high as 135%. Vanadium itself is up 57% in the last 12 months.

Meanwhile, what about the U.S. Dollar Index, which tracks the strength of the dollar against a basket of leading global currencies?

It’s down 6.5%.

Bottom line, with vanadium, you get exposure to the electric revolution – an offensive play for your portfolio…and you also get wealth protection from inflation by moving your money outside the dollar – a defensive move.

Trust but verify.

***How might you play it?

There are a handful of vanadium miners you could consider. There’s Bushveld Minerals Limited. It has a portfolio of vanadium, tin, and coal assets in Southern Africa and Madagascar.

There’s TNG, an Australian company working on development of its Mount Peake Vanadium-Titanium-Iron project.

There’s also Eric’s pick. Unfortunately, I can’t reveal it out of respect for his subscribers. But it’s up 36% on the year, nearly tripling the S&P’s return.

Here’s Eric:

Should vanadium start to move up from its currently depressed levels, I expect that this miner will be our next 100%-plus winner in the battery metal space.

Wrapping up, if Eric’s history with copper is precedent, then we should be looking for big gains coming from vanadium. Better still, the play offers a solid defense against inflation – if it spirals out of control. And if it doesn’t, then we still have the tailwind of the massive electric revolution. There’s lots to like here.

To get more details on the electric revolution, as well as Eric’s specific vanadium play as one of his Investment Report subscribers, click here. In any case, give vanadium a look today.

Have a good evening,

Jeff Remsburg