The monetization of space is officially here… the numerous ways to play it with Luke Lango… what’s happening with gold… Eric Fry is still bullish on this gold royalty company

 

This past Sunday, English business magnate, Richard Branson, rode the VSS Unity into the lower regions of space, just beating out Jeff Bezos’ voyage into space next week.

From CNN Business:

At the top of the flight path, more than 50 miles high, the vehicle was suspended in weightlessness for a few minutes, allowing the passengers to enjoy panoramic views of the Earth and space as SpaceShipTwo flipped onto its belly.

It then deployed its feathering system, which curls the plane’s wings upward, mimicking the shape of a badminton shuttlecock, to turn the spaceship rightward as it flew back into the Earth’s thick atmosphere and glided back down to a runway landing.

As Branson floated around in microgravity, he taped a message using cameras onboard the space plane:

“To all you kids out there — I was once a child with a dream, looking up to the stars. Now I’m an adult in a spaceship…If we can do this, just imagine what you can do,” he said.

While this is the finish line of the “billionaire space race” between Branson, Jeff Bezos, and Elon Musk, it’s the starting line for space tourism…which means it’s the official kickoff of a trillion-dollar industry that will create enormous wealth for foresighted investors.

Here’s how our hypergrowth expert, Luke Lango, described the opportunity to his Innovation Investor subscribers:

We’re hugely bullish on the emergence of the Space Economy over the next decade.

We believe technology has advanced enough to the point where we are on the cusp of commercializing the final frontier. In so doing, humans will create an entire new economy that comprises space tourism, asteroid mining, outerspace solar energy generation, asset tracking, space-based telecom networks, and more.

The opportunities are infinite.

Luke actually recommended Virgin Galactic (SPCE) to his Innovation Investor subscribers last December. When SPCE popped at the beginning of the month, Luke recommended subscribers sell a 1/3rd position, locking in gains of roughly 75%.

As I write, subscribers who followed Luke’s official recommendations are sitting on 38% gains with their remaining 2/3rd position (Luke predicted this recent pullback), which, I suspect, will climb far higher in the quarters to come.

Here’s Luke explaining what should drive such stock gains:

Virgin Galactic is targeting about a billion dollars per year in revenue for each spaceport it operates at scale. Profit margins could be around 50%. So, we’re talking about $500 million in profits per spaceport. With a few spaceports, Virgin Galactic could shovel in billions of dollars in profits per year.

Today, SPCE is worth just $12 billion. Long-term, the upside here is huge. Regardless of what happens on the chart Monday (and this week), Virgin Galactic’s stock is the kind that you buy and hold for the long haul.

***But if you’re looking to capitalize on the space economy in your own portfolio, you’re not limited to just the rocket/tourism companies themselves

The opportunities presented by the space economy are vast and incredibly diverse.

Here’s Luke describing just a few:

There’s the satellite imaging market, which will become increasingly important in the self-driving era since dynamic satellite imagery will provide important landscape and terrain data for autonomous vehicles.

There’s the satellite tracking market, too, which will also become more and more important in the IoT era – where everything is smart and trackable, and companies will leverage satellites to track their IoT assets.

And how could I forget the connectivity market? Companies will increasingly use satellites to fix the world’s internet problem and beam high-speed connectivity to everyone, everywhere.

Or what about the space solar market? That’ll be big, too, since every square foot of solar panel in space gets about 10X more energy than every square foot of solar panel on Earth…

Get the point?

The economic opportunities in space are infinite.

If you’re looking for the best ways to play the space boom, Luke’s Innovation Investor portfolio features a sub-portfolio called “Space Race 2.0” which, as the name suggests, focuses purely on space investment opportunities.

Last week, he officially added what he calls the “FedEx of Space.” Luke says this company is “on the cusp of taking the promising theory of small rockets, and turning them into a disruptive reality – and they’re doing so at hyper-speed.”

To learn more about Luke’s Innovation Investor service click here. In any case, the space economy has arrived – and this is, without doubt, a sector that deserves exposure in your portfolio.

***Meanwhile, back here on earth, why hasn’t inflation sent gold’s price soaring yet?

This morning brought news that consumer prices increased 5.4% in June, compared to one year earlier. That’s the biggest monthly gain since August 2008.

Also, excluding food and energy, inflation increased 4.5%. That’s the largest move since September 1991.

So, what’s been happening with gold as inflation has been stirring in recent weeks?

The yellow metal has now notched three straight weekly gains, but those gains haven’t been all that jaw-dropping. Even today, in the wake of these inflationary headlines, gold is up just 0.3% to $1,812.

For more context, below, we look at gold’s price since June 1.

As you can see, gold’s price took a dive at the beginning of the month, falling from a bit north of $1,900 to roughly $1,770. That was about a 7% drop.

But since the end of June, gold has pushed north about 3%.

So, where does gold stand today?

That’s the question our macro specialist and the editor of Investment Report, Eric Fry, tackled last week in an update to subscribers.

From Eric:

Despite the fact that some inflation indicators are hitting 20-year highs, the precious metals are refusing to move higher.

That’s a bit surprising…and unusual. Perhaps the sector is suffering from a kind of “inflation fatigue.” In other words, even though the inflation readings are high rising, investors seem not to care.

But I suspect this widespread complacency will fade away over the coming months, to the benefit of the gold market broadly.

Before highlighting his preferred way to play gold, Eric revisits the case for additional gold gains. There are two big tailwinds here that are still impacting markets.

Back to Eric:

Inflation’s “sudden” appearance should not be a complete shock. It is the result of two primary forces:

• A massive, new QE campaign
• Off-the-charts government spending

Either one of these factors, by itself, might have been sufficient to nudge inflation into a higher gear. Both of them at once could kick inflation into a gear we haven’t seen since the Bee Gees’ “Stayin’ Alive” was topping the music charts.

In detailing these dynamics, Eric points toward the Fed’s QE program that has sopped up nearly $4 trillion of treasuries and corporate bonds – or more than double the total the Fed acquired during the preceding 11 years.

He also highlights the astonishingly-large deficit racked up by the federal government over the last 12 months – $3.6 trillion. That’s nearly double the $1.9 billion deficit of the preceding 12 months.

By the way, that $3.6 trillion figure is equal to 16% of GDP, which is the largest annual deficit since World War II.

Back to Eric:

Obviously, inflation isn’t good for much. It squeezes profit margins and undercuts the value of our savings.

But inflation can be a “friend” to hard assets like real estate, commodities and precious metals.

In fact, inflation and gold have been “BFFs” for centuries. And they probably remain close friends today, even in this modern, cryptocurrency-enabled age.

Until proven otherwise, therefore, I’m betting gold will continue to provide at least partial protection from any serious bout of inflation.

***One of Eric’s favorite ways to play gold is through Osisko Gold Royalties Ltd (OR)

Osisko is a midsized streaming and royalty company that holds a portfolio of 138 royalties, streams, and precious metal offtake agreements.

This is a powerful business model…

A streaming company typically provides financing to mining companies that are having cash-flow trouble. In exchange, the lender receives the right to purchase at a set price some fixed percentage of the mining company’s future metal production.

Meanwhile, with royalties, the company that provides the financing receives a percentage of the mining company’s future production – sometimes for as long as the mine produces the commodity.

With Osisko, investors are getting both streaming and royalty exposure. This is a powerful model that emphasizes cash-flows with limited risk.

Back to Eric:

Because the current inflation trend is gaining momentum, and because I expect gold to respond favorably to that trend, I am also expecting Osisko Gold Royalties to move even higher as well… and to finish the year on a strong note.

I’ll add that Osisko is just one of a handful of precious metals plays Eric has in his Investment Report portfolio. To learn more, click here.

***What to watch from gold in the coming weeks

This will be an interesting week for gold. Historically, metals often bottom in June or July, then move higher by early fall.

If we’re to follow this pattern, the next level to watch is $1,834, which is gold’s 50-day moving average (in blue below). It’s about 1% higher than gold’s price today.

If the precious metal can break through this level and hold, look for a rally back to the psychological level of $1,900 to see if we can break the recent highs from late May.

Regardless of how it plays out, we’ll keep you up to speed here in the Digest. And give Osisko a look – if gold resumes a sustained leg higher, Osisko should reap the benefits.

Have a good evening,

Jeff Remsburg