First Gold, Then...

What’s next for metals? [Morning Reckoning] October 22, 2024 [WEBSITE]( | [UNSUBSCRIBE]( First Gold, Then… Baltimore, Maryland October 22, 2024 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, All eyes are on gold’s record-breaking run. The gold bull is in full swing this month as the yellow metal extends to new highs… again. Gold has been on an absolute tear since breaking out above $2,500 for the first time ever back in September, jumping almost double-digits on its run above $2,700. I’ve recently discussed how the financial media was largely ignoring gold’s impressive rally to new highs. But that’s starting to change… In fact, the gold rally is making the leap from the financial section to the front page. ABC News even ran a quick gold explainer late last week as futures topped $2,700 for the first time, listing election uncertainties and conflicts in the Middle East as key drivers of the rally. I think it’s safe to say enthusiasm is building around these precious metals for the first time since gold extended beyond $2,000 at the start of the second quarter. Now, we’re beginning to see follow-through into silver and the mining stocks. Almost everything in the precious metals space is enjoying its day in the sun. Longer-term, gold has a bright future. But it’s due for a break soon, whether that means a pullback or some sideways consolidation. The cat’s out of the bag! Everyone and their third cousin is now hip to gold’s explosive potential. Thankfully, gold isn’t the only game in town. In fact, we’re seeing some other key breakouts taking shape across the metals space. [Your full and undivided attention is requested...]( Email: {EMAIL} Cashline Status: [Inactive]( After completing a routine analysis of our customer service records, we have found that you are not taking advantage of the most critical facet of our company right now. This is the steady and consistent strategy that could make or break your portfolio during the most contentious presidential election season in history - and the potential economic crisis that its results could cause. That’s why our Director of Customer Success has recorded a brief video message detailing the steps you should take to activate access today. [ WATCH NOW ]( [LEARN MORE]( Tracking the Other Metals Boom Back in the early spring, we touched on some of the metals other than gold that were starting to break out. Dr. Copper was printing new all-time highs. It felt like the commodity bull run was ready to explode, dragging stocks higher with it. At the time, copper was successfully holding its $5 breakout and industry pure plays were exhibiting impressive momentum. Southern Copper Corp. (SCCO) was tagging new highs to begin the second quarter and had already racked up year-to-date gains of 25%. But those dreams of a bigger breakout were short-lived. Copper failed to hold above its 2021-2022 highs and quickly lost that magical $5 level. Instead of consolidating its multi-week rally, everything began to fall apart. It was a rough summer to be a copper bull. By mid-August, the metal had coughed up all of its earlier gains, dropping more than 20% from its peak Sellers dashed the excitement and copper’s rally as quickly as it started. But that was four months ago… Fast forward to today, and Copper is working on repairing the damage from its “false start” breakout: Copper bottomed out in August and has since clawed its way back from the dead. Yes, it still has work to do. And we’ve had to deal with some choppier action lately due to the will-they-or-won’t-they stimulus plans out of China that have rattled the markets. But copper futures could find its legs again on a breakout above $4.75, which would probably set up another $5 test. Plus, industry bellwether Southern Copper Corp. (SCCO) continues to look constructive at these levels. Metals Mania Goes Nuclear Copper isn’t the only industrial metal stretching its legs these days. Uranium plays have also snapped back to life. Uranium has been an extremely volatile sector in 2024. Like copper, uranium was threatening to break out back in the second quarter before suddenly reversing into the summer months. But it’s back in business as the nuclear story continues to evolve. The Global X Uranium ETF (URA) has now surged 45% off its September lows to post fresh 10-year highs: Up until very recently, the headlines regarding tech’s surging energy demand were primarily juicing utility stocks such as Constellation Energy (CEG) that provide the supply. I get it! CEG is mooning like an alt-coin. But thanks to some help from Google and Amazon (both are investing heavily in nuclear to help power surging data center energy demands) we’re seeing uranium names take the baton and run. Cameco Corp. (CCJ), the top holding in URA, is up more than 60% since Aug. 5 and has just posted new all-time highs. Plus, it’s outperforming the broader market. NexGen Energy (NXE), another major URA holding, is challenging its record high set in May of this year – a high set two months after gold broke out and two weeks before copper futures hit five bucks. Of course, we can’t leave out Denison Mines (DNN) when discussing uranium. Founded by legendary mining engineer Stephen Boleslav Roman in the early ‘70s, DNN is still going strong, up 63% since early September. Lighting the Fuse on Lithium Speaking of energy-related metals, we also have Lithium… The Global X Lithium ETF (LIT) ripped higher along with the rest of the China trade last month. In fact, LIT finished September with the largest 1-week rate-of-change since April 2020. We consider this a bullish momentum thrust, or an initiation thrust, as this type of price action often kicks off a bigger uptrend. (LIT rallied roughly 310% from the spring of 2020 to the fall of 2021.) The gold bull run will likely spill into lithium mining stocks, but these beat down market laggards still need to prove themselves to willing buyers. We’re measuring new highs for lithium names in weeks and months, not years. Top lithium miners Albermarle Corp. (ALB) and Sociedad Quimica y Minera de Chile (SQM) fell roughly 70% from their 2022 peaks as both printed multi-year lows earlier this summer. Buyers will require more constructive stats. But remember, by the time everyone is talking about lithium, these miners will be ripping like Constellation Energy. Gold’s decade-long bear market scared virtually everyone out of the metals trades. In 2024, they’re beginning to find their way back. This is only the beginning. As performance improves, investors will have to work to gain exposure to these emerging market themes. That’s when the real gains begin to stack up. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Response Requested]( 1/1000th of an ounce of gold available You're being offered a 1/1000th of an ounce of gold when you upgrade your account. It will come in the form of a “Gold Back” - a new type of gold currency that’s starting to spread across America ([click here to view](. [Click here to learn how to claim your new Gold Back Currency<]( [LEARN MORE]( In Case You Missed It… The Starlink Skyway Sean Ring, Editor [Sean Ring] SEAN RING Good Morning Reader, As I look out the window of my new study, I thank the Good Lord I can live in the middle of rural Italy and still do my job. My parents are downstairs watching television, while my wife just made me a fantastic lunch. My son, Micah, is at school, and we’ll pick him up shortly. It’s truffle season here in Il Piemonte, and I’ve already sampled the goods. Since the weather has cooled, we lit up my fireplace for the first time this autumn. My best friend from graduate school visited the other night as he was driving through France and Italy. We had plenty of room at the inn. I thought this would be possible, but thanks to idiotic planning, Telecom Italia put the fiber optic cable on the wrong side of the street. That means my neighbor’s cows have broadband internet access, but I don’t. So, I had to consider an alternative that I had thought would be prohibitively expensive: Elon Musk’s Starlink. It’s simply the best thing that’s happened to my career since I’ve been in Italy. Elon’s satellite dish currently sits in my yard – yes, it’ll be on the roof soon – sending the signal from his satellites to my computer. That means I can have my cake and eat it, too. I can live in my happy place and do the work I love doing. While I’m thrilled at my luck, Starlink’s arrival really solidifies the movement out of cities and a monumental shift in global connectivity. Starlink is reliable, affordable, high-speed internet access that works anywhere. It’s a game-changer for individuals and businesses, particularly in rural and remote areas. Looking at the bigger picture, Starlink fosters a "dispersion expansion"—a trend where individuals and families relocate from crowded and expensive urban centers to more dispersed, often rural areas. This shift carries enormous implications for infrastructure, real estate, and the economy, marking the beginning of what I call The Starlink Skyway. The Promise of Satellite Internet: Democratizing Connectivity Satellite internet, led by Starlink, OneWeb, and Amazon’s Project Kuiper, provides high-speed internet access by deploying a low-Earth orbit (LEO) satellite network. These satellites are closer to Earth than traditional satellites, which reduces latency (the delay before a data transfer) and improves internet speeds. Thanks to this, satellite internet has made broadband accessible to areas that previously had limited or no access, like mine. The impact of this access is profound. By extending reliable internet services to underserved communities, satellite internet connectivity becomes available to all. This means people in rural or remote areas can now participate in the digital economy, access information, and engage in remote work opportunities, giving them new possibilities and a brighter future. In many cases, the appeal of leaving congested cities for quieter, less expensive areas becomes viable and desirable because the necessity of being near urban infrastructure has diminished. Commercial real estate has been on a downtrend since Q4 2021. We don’t need as much of it anymore. Remote Work and the New Dispersion Expansion The COVID-19 pandemic’s government-mandated private sector shutdown accelerated remote work trends, and satellite internet further solidified them by expanding connectivity options. With Starlink and other services ensuring reliable internet, employees and employers are reconsidering the need for physical presence in densely populated cities. The aforementioned “dispersion expansion” shift reshapes real estate markets and local economies, particularly in suburban and rural areas. People are migrating from urban centers for affordability, space, and a better quality of life. Smaller towns and rural regions, previously limited by weak internet infrastructure, are becoming attractive options. This migration influences local economies in two ways: Increased Local Spending: As new residents bring income and spending power, they fuel local businesses and service industries. Real Estate Boom: Housing markets in non-urban areas are experiencing growth as demand increases, driving up property values and creating development opportunities. Economic Implications of The Starlink Skyway The economic effects of this shift are multifaceted. As people disperse, demand increases for infrastructure investments to support these new regional hubs. The need for expanded road networks, energy grids, and utilities grows as populations spread out. This infrastructural boom isn’t limited to traditional assets; the need for renewable energy, smart grids, and upgraded digital infrastructure drives demand for metals and other hard assets essential for modern infrastructure. As rural areas develop, there’s a renewed need for hard assets like metals, which are crucial for building infrastructure. Copper, for instance, is vital for electrical wiring and telecommunications, while lithium and cobalt are essential for batteries and renewable energy systems. These materials become indispensable as dispersed areas modernize and integrate with a greener, tech-enabled economy. As the new infrastructure expands, so do employment opportunities in construction, telecommunications, and tech industries. These jobs are not limited to installation and maintenance but also include roles in engineering, planning, and digital technology that grow and sustain these new networks. With more people and businesses relocating to less densely populated areas, rural economies, which have historically faced stagnation, are experiencing a revival. Increased tax revenues from new residents fund public services like schools and healthcare, enhancing the quality of life and making these areas even more attractive. The Starlink Skyway’s Challenges While the Starlink Skyway grants numerous benefits, it also brings challenges. The sudden influx of residents into rural areas strains existing infrastructure. Additionally, questions arise regarding the satellites' sustainability and the long-term implications of relying on space-based infrastructure. The increased infrastructure to accommodate dispersed populations has environmental implications, from habitat disruption to increased energy consumption. Furthermore, the production and deployment of thousands of satellites are raising concerns about space debris and the ecological footprint of satellite manufacturing and launches. Rapid population growth in rural areas will lead to short-term overburdened resources and services, such as water supply, healthcare, and schools. Policymakers and planners must anticipate and manage these pressures to ensure smooth development. While satellite internet has the potential to close the digital divide, access to these services is only sometimes affordable. For lower-income populations, the cost of satellite internet could still be a barrier, leaving gaps in connectivity. I currently pay 40 euros per month for Starlink and initially paid 225 euros for the equipment. Over time, the price should decrease for families with trouble making that payment. The Future of Work, Living, and Wealth Distribution As more people live and work remotely, the traditional notion of wealth being concentrated in cities is shifting. Investment opportunities are emerging in rural real estate, infrastructure development, and the metals essential for these projects. As prosperity spreads to new areas, traditional economic hubs like New York, London, and Tokyo may no longer be the sole wealth centers. This diversification helps buffer against regional economic downturns by spreading economic activity more broadly. The dispersion effect also leads to a rise in regional entrepreneurship. As new residents bring skills and capital to rural areas, they create businesses that cater to local needs, further driving economic growth. As infrastructure builds up, so does the value of hard assets. Investors who recognize the significance of metals and minerals in this new infrastructure are well-positioned to benefit. Furthermore, the push for renewable energy solutions in dispersed areas emphasizes the need for lithium, cobalt, and other metals, which will continue to be critical. Wrap Up The Starlink Skyway is more than just improved internet connectivity. It’s an economic and societal shift that redefines where and how we live, work, and invest. Satellite internet fosters a new era of economic growth and opportunity by enabling people to move away from cities and thrive in more dispersed areas. This opens up substantial investment opportunities and is one of the main reasons we’re so bullish on precious and base metals. As we look to the future, it’s clear that the Starlink Skyway will continue to influence society's evolution, spreading prosperity to new regions and challenging old paradigms. Understanding and harnessing this effect will be crucial for investors, entrepreneurs, and policymakers to navigate the changing political and economic landscape. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. 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