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August
22
2019

The Dollar’s Decline Will Fuel the Next Commodities Boom
David Foest

Chris’ note: Chris here, managing editor of the Dispatch. With gold on the move – up 18% over the past three months – I tracked down my good friend and go-to person when it comes to all things commodities, David Forest.

I wanted to get Dave’s thoughts on what the big picture looks like… and whether this rally can continue.

As you’ll see, not only is gold just starting to heat up… but the entire commodities sector is on the verge of a huge boom.

And Dave says there’s one type of commodity – besides gold – that needs to be on your radar today if you want to benefit from this trend.

He tells me all the details below…

Chris Reilly, managing editor, Casey Daily Dispatch: Dave, as regular readers know, you’re always on the road, uncovering the biggest opportunities in the resource space. One of your stops earlier this month was the Sprott Natural Resource Symposium in Vancouver. What was the vibe like there? 

Dave Forest, editor, International Speculator: Well, Chris, during one of the days at the conference, I was part of a breakfast Q&A with Doug Casey and Nick Giambruno.

One thing was very clear: There was a lot of interest in gold.

Now, as you know, the gold price has moved up quite significantly since the middle of June. It’s pushing to all-time highs.

In fact, gold is hitting all-time highs, not in U.S. dollars, but in a number of other currencies. We’re seeing all-time-high gold prices in Canadian dollars, in British pounds, and we’ve already had an all-time high in Australian dollars. So there’s a number of currencies around the world in which gold is the highest that it’s ever been, even though we don’t see that reflected in the U.S. dollar price, because of the current strength of the U.S. dollar.

But there was a real sense from the conference, both attendees and presenters, that we may have hit a turning point here, where the U.S. dollar is starting to falter.

Chris: And that, in turn, is good for gold?

Dave: Exactly. With the trade war revving up again, there’s an increasing lack of faith in the U.S. economy, the global economy, and the dollar. And one of the reasons gold is going up now is because people are rotating out of dollars and into something safer.

That has a lot of people enthusiastic about gold particularly, but it’s also good for all commodities, because generally when we talk about commodities, we talk about the U.S. dollar price of those commodities.

So as the dollar weakens, hard assets across the board get more valuable. 

Chris: What other commodities besides gold are you bullish on right now?

Dave: We’re very positive on agricultural commodities.

If gold has been beaten down, agricultural commodities have been absolutely buried. I’m talking 40-year lows in prices for things like corn. And for the longest time, nobody cared about these commodities. There was no coverage… nobody paying attention to the sector.

And now, that’s starting to change, partly because the U.S. has been ravaged by the worst flooding, potentially ever. People are talking about this year in the U.S. harvest as a 100-year black swan event.

So that catastrophe is getting people interested in what’s happening in the market, but it’s all coinciding with this larger move in commodities.

Interest just seems to be coming back to all kinds of corners of the commodities world.

Chris: Is there still time to profit from this commodities boom?

Dave: Absolutely.

When I’m talking about interest coming back, this is just the first frame.

Now, some of the commodities’ prices, like gold’s, have moved up notably… but the stocks are still very, very cheap on a historical basis. It takes time once an upcycle begins for the benefits to trickle through to the smaller companies. So there’s plenty of time left to get positioned.

In fact, this is a perfect time to be buying, because you can buy with the knowledge that the market is indeed in an upswing. Prices are going up, and yet, you can buy at the same prices in many of the juniors as you could a year ago, when it still was not really certain if anything was going to happen. 

Chris: What kind of companies should readers be looking at to take advantage?

Dave: For gold, we’re particularly focused on smaller exploration companies right now. The smaller ones are really where the best buys are these days.

When it comes to agriculture, unfortunately, there aren’t very many listed agricultural companies anymore in the U.S. or globally. So ETFs [exchange-traded funds] are a solid way to play this trend.

They tend to have a lot of spring in them. If you look at the trading patterns of these things, they can move 50% in a matter of weeks. And agricultural commodities themselves are notorious for huge price swings, like we’re starting to see now.

Swine fever in China has probably wiped out close to half of the entire Chinese hog population. We’ve got fall armyworm, which is a parasite, invading large slots of China. It basically destroys all of the crops in its path. Corn, wheat, all of these things.

At the same time, you’ve got this disaster in the U.S with massive flooding and huge acreage that probably didn’t get planted. With all of this happening, the daily price swings in things like hogs, corn, and wheat have been huge.

As always, when investing in resources, you should never bet more money than you can afford to lose. A small stake is all you need to make big money off the boom I see coming.

Chris: So to wrap up, commodities are primed for a big rally… and readers should focus on gold and agriculture now to start taking advantage.

Dave: That’s right, Chris. These are exciting times. This rally is just getting underway, and we see big things ahead.

Chris: Great stuff. Thanks, Dave.

Dave: You’re welcome.

Dave is a geologist who has worked professionally in mining and petroleum over a 20-year career. He has also bridged his technical expertise into the finance and investment sector, originally joining Casey Research in 2004 when he founded the Casey Energy Speculator dedicated to finding high-potential investment opportunities in oil, natural gas, uranium and renewables globally.

He has founded his own mineral exploration and development companies, raising over $80 million in equity financing from some of the most well-known resource investors in North America. His past successes include the development of a 10-million-ounce gold deposit in Colombia, as well as becoming the first to be granted a modern exploration license in the emerging economy of Myanmar, Southeast Asia. He also served as Managing Director of Notela Resource Advisors, an advisory firm analyzing and designing global investment opportunities in the natural resource sector.

Dave continues to travel extensively — particularly in Latin America and Asia — reviewing resource projects and investment opportunities. His recent visits including Brazil, Mongolia, Myanmar, China, Russia, Colombia, Peru, Nevada, Laos, Zambia. Madagascar, Indonesia, Portugal and the Czech Republic.

 www.caseyresearch.com