The Big Commodity Boom for Aussie Investors – The Aussie Invasion
Are you ready?
I mean, you’ve heard me say it enough. I bet you can even say it with me.
‘Australia’s hit the geological jackpot.’
You want oil? We got it…
You want gas? We got plenty of that too.
Copper, iron ore, zinc, lead, silver, and gold…yep, yep, yep, yep, yep, and hell yes.
We’ve even got the unpopular ores that nobody likes until that commodity cycle is hot again, like uranium and coal.
To boot, because of our climate we can grow and farm almost any agricultural commodity in the world.
Wheat. Wool. Cotton. Sugar. Soya beans. Cattle. Salmon. Pigs. Timber. Dairy. An incredible mix of fruits and vegetables.
Our ability to mine it or grow it is surpassed by very few countries…
Which means that mining and farming are pretty much Australia’s superpowers.
I know, I know. I say it all the time.
But there’s a reason I like to remind you of it, dear reader. There’s a commodity boom looming and I don’t want you to miss it.
Discover why this gold expert is predicting a HUGE spike in Aussie gold stock prices. Download your free report now.
The Aussie invasion continues
You would’ve kicked off the week with news from your other Daily Reckoning Australia editor, Callum Newman.
News of Evolution Mining Ltd’s [ASX:EVN] play for a Canadian junior had found its way to his desk. Callum wrote it was yet a done deal, but that EVN were hopeful they’d be able to add another Canadian tiddler to their stable.
The Aussie invasion in Canada continues.
Though it was less of an invasion, more a case of opportunism.
You see, the ‘pot stock’ boom had taken over Northern Hemisphere markets.
High-risk investors chose the weed market over hard rocks.
Leaving many major Aussie miners such as Evolution and Northern Star Resources Ltd [ASX:NST] — or even smaller ones like Matador Mining Ltd [ASX:MZZ] — able to pick up historic gold mines and exploration projects for a song.
While this merger and acquisition trend started a couple of years ago, there’s more to come.
There’s a new gold rush underway, though this time around you won’t need a pan, bottle and nitric acid.
This modern-day gold rush began in late 2018, when Newmont Mining made a bid for Goldcorp.
Two months later, as 2019 kicked off, Canadian-based gold giant Barrick Gold made an offer for Randgold. Together those two became a US$24 billion gold behemoth with the largest gold reserve base in the world.
Yet the ink had barely dried on that merger and Barrick has come out swinging again. This time with a US$18 billion bid for Newmont.
Newmont’s management have rejected the offer, saying Barrick has undervalued the company.
But for gold investors, this was a very big signal for what’s to come.
The gold mining giants were fighting over each other’s assets.
Essentially, it led to a melt-up in gold companies. That is, a rush to buy up one another to become the gold miner with the largest resource base.
This excitement filters down through to the smaller and mid-cap stocks as well.
Not only that, but Australia’s top 15 gold producers are ridiculously cashed up. That cash can either be spent on exploration — which shareholders of blue chips don’t like.
Or that cash could go into buying established explorers or developers.
Either way, gold in the ground is getting harder and more expensive to find.
For gold miners that want to expand and increase their share price, mergers and acquisitions are often the only way to go.
In other words, to become bigger and leaner in the expensive world of digging for gold, companies need to buy each other out.
Maybe the big ‘mega-mergers’ are over, but it paved the way for the smaller guys to move in.
Don’t bet the farm on lithium
While gold exploration underpinned Australia’s economic prosperity, we have a wide variety of commodities available.
The higher the prices go…the more likely we are to dig ‘em up and sell ‘em to the highest bidder.
And this is where Australia’s geological jackpot continues.
The battery metals story has dominated headlines for a couple of years now. The metals we’ll need. Where they’ll come from and how you’ll process them.
This was something Callum and I discussed on our YouTube channel yesterday.
Is the lithium investment story all it’s cracked up to be?
Investors shouldn’t be sucked into those ‘long-range’ forecast demand reports for battery metals, I said. Simply put, the final metallurgy for battery tech isn’t settled. Scientists are toying around with sodium-ion batteries that forgo any lithium at all.
The one metal we did agree had a bright future ahead? Copper. Check what we had to say over here.