Impact of Higher Oil Prices on Markets

Sean Brodrick, Editor of Wealth Megatrends, Supercycle Investor, Resource Trader, and contributing analyst to Weiss Ratings Daily, joins us to review how he is trading these volatile markets on the back of Middle East geopolitics.  He is adding to energy, fertilizer, and chemical stocks on the back of rising oil prices, trimming back some gold and silver stock gains, and holding steady with select critical minerals stocks that may benefit from future government funds and policy initiatives.

We start off in a general discussion on what the higher oil prices may mean for inflation trends, fiscal and monetary policy, and trade amongst nations.  Dialing into the energy stocks, Sean is avoiding some international oil service companies that may be impacted negatively by the Strait of Hormuz being closed.  Conversely, Sean is adding to quality North and South American energy companies like Petrobas (PBR) and Cenovus Energy (CVE), and through the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP), that are benefiting from increased revenues and growth due to the higher oil prices.

With regards to the fertilizer and chemical companies, Sean likes names like CF Industries Holdings (CF), Nutrien Ltd (NTR), and The Mosaic Company (MOS), due to their competitive ability to utilize cheap North American natural gas and processing to export fertilizer and chemicals overseas to areas that have higher nat gas prices and are affected by constrained supply of key ingredients with the Strait of Hormuz chokepoint still in effect.

Sean remains bullish for medium-term and longer-term in the precious metals, because all the broader fundamental macroeconomic and geopolitical factors are still in place and haven’t changed.   

• Despite that outlook, in the short-term, he has been trimming back gains in a few silver and gold stocks, like Avino Silver and Gold (ASM), to raise funds for deploying into other sectors.
• He reiterated the point that this is not ‘panic-selling,’ or giving up on the precious metals thesis; but rather, strategically taking gains for swing trades in other areas of the market.
• However, after the wild price volatility in both directions for gold and silver in January and early February, he believes that we are likely now going to trend sideways in a price range for the near-term; basing for a while before the next move to the upside.

With regards to critical minerals, Sean remains quite interested in the metals of strategic importance to defense for the US and the world at large, like rare earths, antimony, and tungsten.

• He highlighted United States Antimony (NYSE American: UAMY) which has the US government as a partner as the kind of company that he’s been holding in his portfolio.
• Sean highlights the US Pentagon and Defense Department is allocating $200 Billion to invest in mineral development and processing for national defense, and highlights that domestic critical minerals stocks in rare earths, antimony, and tungsten have a higher likelihood of benefitting from these initiatives.

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