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dzonefx
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Number of messages : 533
Points : 3101
Date of Entry : 2013-01-29
Year : 47
Residence Country : Beograd

This Metal Loves Donald Trump

on Sun Nov 13, 2016 8:01 pm
So the election has passed and we all know the outcome.

To get back to business as usual, we investors have to forget the ugliness of the campaign season and focus on where the opportunities lie.

However, one such opportunity comes directly from this most ugly and divisive of campaigns.

You see, with a campaign like this one where neither candidate had overwhelming support—for evidence of that, one need only look to the result of the popular vote—the winner in either case would have needed to unite this nation through a focus on rebuilding our infrastructure.

Why? Because our infrastructure impacts everyone and it is crumbling—quite literally in some cases—with the American Society of Civil Engineers giving us a D+, and it is one of the only issues that could bridge the divide (pun intended) between our two major parties.

There are estimates that the country would have to invest as much $3.6 Trillion to fix it all by 2020, an amount that seems impossible. But President Elect Donald Trump has proposed an aggressive $1 Trillion infrastructure investment which will be a great investment in our country especially in this age of low interest rates.

According to the Economic Policy Institute, a $250 billion per year debt-financed investment into roads, bridges, waterways, etc., would potentially boost the GDP by $400 billion and potentially add 3 million new jobs.

The feasibility of a scenario such as this aside, an investment in our infrastructure of this magnitude has the potential to boost economy-wide productivity growth, which would be a very good thing.

While getting into the nuts and bolts of Trump’s proposed investment is beyond the scope of this article—and is better left to political pundits—no matter how his plan is executed, it will mean commodities will benefit under his presidency.

One metal in particular stands to see major benefit: copper.

Where there is massive infrastructure building, there’s going to be a major need for copper as copper is one of the most essential raw materials on the planet with uses ranging from building construction and power lines, to general wiring, transportation equipment, and industrial machinery equipment.

A look at copper futures shows us just how important this metal is to a massive infrastructure undertaking.


It appears the market recognized as I did that no matter who won, an investment in infrastructure would be imminent and copper would be in demand. Thus copper, which has seen little change this year compared to other metals, started to gain in the days leading up to the election.

But when Trump was announced as the winner, copper went parabolic and has continued on its ascent higher in the days since.

So how can you capitalize on the rise of copper?

My colleagues at Investiv have been abuzz over one particular junior miner that stands to see huge gains once the market realizes its potential.

This miner primarily mines copper and it is up roughly 34% since we first recommended the stock in the beginning of this year.

While this stock has already moved quite a bit this year, there is still great long-term upside potential.

Not only does this miner primarily produce copper, they also very recently made a huge bet on zinc, another metal that is essential in infrastructure building.

Their investment in zinc could not have come at a better time. Both zinc and copper are going to be in huge demand, and both are approaching big supply gaps. Full production at their new zinc plant is expected by the end of the year and is perfectly timed with the start of the zinc supply gap.

Neither of these metals have an unlimited supply, and thus their prices will increase especially with the major push for infrastructure building in the U.S., not to mention the continued demand for the metals in China.

This miner is uniquely positioned to benefit from these circumstances, and its fundamentals are solid. The company has no debt, trades below book value, boasts a nearly 6% dividend yield, and insiders own 19% of the company.

Donald Trump’s victory can only be good news for this miner, and sooner or later its value will be realized by the market and prices will soar, so going long this stock now would be a great move.

source:  Investiv.co
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