Commodities in 2018 & A Standout Company (Ticker Included)

Written by Gerardo Del Real
Posted January 8, 2018 at 10:54AM

I hope everyone had an excellent holiday season and wish everyone a prosperous 2018. Before looking ahead, let’s look back at 2017 and see how commodities performed.

Commodities in 2017

Cryptocurrencies have hogged the bulk of the speculator attention span in 2017. It really didn’t matter where I went because all everyone wanted to talk about was cryptocurrencies.

commodities too cheap

Meanwhile we are clearly in a bull market for copper and zinc, among others.

Aluminum was up 34% on the London Metals Exchange. Copper was up 32%, Zinc was up 28%, Nickel was up 23%.

Palladium was up 54% — the highest level in 17 years.

Uranium, which I believe will have a breakout year in 2018, gained 17%.

Cobalt was up 129%, driven largely on a trend we were able to get in front of early — the electrification of everything.

Mining giant Glencore predicts that a third of new vehicles — some 37 million — will be electric by 2030.

It’s not a coincidence that junior miners with clear differentiators — like Leading Edge Materials (TSX-V: LEM) and Advantage Lithium (TSX-V: AAL) — are hitting new highs.

Expect higher prices for both in 2018.

commodity price changes 2017

Gold was rangebound all year but closed the year strong, up 13%. Silver also lagged but managed a 6% gain for the year and Brent oil closed the year up 17%.

The dollar had a tough year, the weakest since 2003 — down 10.23% — which led to most other major currencies appreciating nicely.

2018 Looking Ahead

Despite the tough year for the dollar, gold and silver could not break out and that, to me, is an indicator that neither is ready to break out yet.

I still believe we have one last shakeout in the precious metals and one last surge in the dollar. I believe both will be brief but violent shakeouts that set the stage for the gold and silver bull market we all want to see.

Departing Fed Chairwoman Janet Yellen announced a 25 basis point rate hike and indicated that the market should expect at least three more hikes in 2018.

I believe the Fed needs to hike at least three times and likely four in order to give itself the wiggle room it will need to launch its next version of QE. That will happen when overseas bond markets begin to crack, and crack they will.

Weakness and volatility in overseas bond markets will lead to a rush into the dollar, the major U.S. indices (a dividend return beats negative interest rates every time) and that rush into the dollar will be the fuel that sends gold and silver lower before a sharp rebound to the upside that will mirror the copper and zinc performance in 2017.

I said it last year: we need one last breakdown in order to have the energy for a real breakout. That breakdown did not materialize in 2017 but neither did the breakout.

2018 will be a transformational year for the commodity landscape with multiple bull markets in full force.

Despite the bullishness for metals like zinc, many quality juniors have lagged the metal's robust performance. So what’s cheap?

In the zinc space Hannan Metals (TSX-V: HAN) stands out and presents a pretty compelling speculation.

Hannan Metals is a base metal exploration company with 100% ownership of the County Clare Zn-Pb-Ag-Cu project in Ireland, which consists of nine prospecting licenses for 32,223 hectares.

The Kilbricken project, a new high-grade Zn-Pb-Ag-Cu discovery, is the company’s flagship project.

Better intersections, to date, include DH 46: 20.5m @ 7.5% Zn, 9.9% Pb, 0.07% Cu, 74.6g/t Ag, DH06: 21.3m @ 11% Zn, 4.8% Pb, 0.06% Cu, 94.4g/t Ag.

The project is drilled over more than 1.5 kilometers and is ready to explore and expand within a 40 kilometer strike area.

Drills are turning and I expect the company to add to the current resource and make new discoveries this year.

With a bull market in zinc, experienced management, a market cap of approximately C$11 million, a tight share structure, and multiple catalysts in the near-mid-term, Hannan makes for a great speculation and is a bargain at these levels.

To your wealth,


Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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