Friday, 31 May 2024

By James Cooper Editor, Mining: Phase One and Diggers and Drillers

Twitter (X): @JCooperGeo

[3 min read]

Dear Reader,

It’s James Cooper here.

Today’s Fat Tail Daily orbits around a single ASX stock recommendation.

An urgent one.

And perhaps one of the most significant in my tenure as
Fat Tail Investment Research’s head resource stock analyst. 

Let me give you the background...

It’s now hard to ignore the firing-up of the Australian commodities space.

Explorers kicking back to life...

The Federal Government splurging cash again on certain ‘critical metal developers’...

The copper spike bumping AI stocks from the headlines...

Gold’s bull market making more records, silver not far behind...

BHP’s audacious bid for Anglo American.

At the time of writing, that’s been shuttered.

As ABC reports today:

‘It could have been one of the biggest deals in recent history — BHP swallowing up Anglo American to the tune of $75 billion.

‘The jewel in the crown? Anglo's copper assets.

‘The proposal was first lobbed by the world's biggest miner in April.

‘Technically not a formal offer, but it was the start of the takeover process, which has been back and forth with, no doubt very expensive, lawyers and financial advisors ever since.’

That ‘could have been’ deal is on the backburner for now.

But you don’t need to be a mining aficionado to sense a train finally pulling out of the station...after years of delays, false-starts and neglect.

Here’s an on-the-the-ground example:

I’ve been following with interest a new world-class automation and robotics-testing facility for miners that’s expanding at a rate of knots in Western Australia.

I can tell you from extensive operational and financial experience in the mining industry....

A project like the Australian Automation and Robotics Precinct (AARP) wouldn’t have seen the light of day even a few years ago. 

This comeback by some projections could add at least $75 billion to the economy by 2030.

‘This is a BIG deal’, says the lead of AARP.

As focus...and money...starts to shift back to Tier 1 miners...startups...and everything in between...

WHAT’S THE BEST SINGLE-STOCK
MOVE TO TAKE ADVANTAGE?

Well, that’s always a matter of opinion.

But I think I have one for you.

Today, we release my findings on this stock, which you can access here.

Now, this current revival will not be a surprise to you if you’ve tracked my work since I joined Fat Tail Investment Research. 

As you’ll see, I’ve been predicting what’s now unfolding...and laying the groundwork for it...since 2022.

My background in exploration geology during the last mining boom has given me a small advantage.

I’ve worked for major and junior companies throughout Australia and Africa, including Barrick Gold, Equinox Minerals, Crosslands Resources, and Northern Star.

Getting ‘in the dirt’ with all phases of exploration across a host of different commodities...has meant I’ve been able to read the tea leaves a little sooner than your average punt on this new resurgence. 

Only now, though...

...are some of the stock plays I’ve seeded in the last year starting to really fire up.

The NEW recommendation I have found for you today...which, for now, we’ll classify as ‘LAST BARREL’...is on a different level, though...

Right now, the stocks on my buy list centre around my sphere of personal experience.

Copper, strategic metals (what I call critically endangered minerals) and industrial metals.

Also mining services, the ‘shovel-sellers’.

(That section of the portfolio is now up an average of 30%.)      

Not everything’s firing, though.

Soft commodities are still cold. I think I backed them too early. The ‘Food Basket’ section of my buy-list remains -20% in the red.

But, what I’m seeing now is
a clear shift in momentum...

If you were to buy a single stock to capture that, what would it be?

That brings me to my latest play.

It falls into NONE OF THE ABOVE categories.

Indeed, it falls a little further out of my direct expertise.

I’ve never explored for an outfit like this.

We’re turning over new ground here.

But you REALLY need to hear my rationale behind buying this stock, and doing it very quickly.

If I’m right about the general theme...and the company in particular...

...this could pan out to be one of the most promising resource speculation in Australia to own throughout 2025.

Or...

...it could flatline for the rest of this year and LOSE you money next year.

I want to be brutally clear on that, right at the outset. 

But this particular company is the one stock preventing me from sleeping right now.

I can’t stop thinking about it...

As I’m about to lay out for you, it sits at the nexus of a new cyclical boom.

One I’ve not covered much in Fat Tail Daily. Or my paid newsletters.

This stock centres round a potential
FINAL boom in the oil sector

It’s based around some basic facts. You can get the full details here, but I’ll give you a grief summation:

• The oil price, while it’s had a correction in the last few weeks, has been steadily rising over the last year or so.
• A lack of exploration and development could deliver long-term upward price pressure for certain well-positioned oil and gas stocks. About 97% of the oil produced today was discovered in the 20th century.
• Geopolitical shocks could create even greater upward price pressure. A huge one could come if Putin decides to use his Oil Weapon around time of this year’s US election. The world’s most important commodity remains more vulnerable to disruption than ever before.
• Replacements for oil are years, if not DECADES away from coming online. ‘We’re in a situation now where in a couple of years’ time we’re going to be very short on supply’, Occidental CEO Vicki Hollub just told CNBC.

To me, it’s an absolute cut-and-dry case for getting exposure to certain oil stocks now, while the crowd still doesn’t realise what’s about to happen.

We are in a wider commodities resurgence.

The oil and gas sector has yet to fully take off.

I think that’s going to happen, soon.

So what’s the stock I’ve landed on designed to take advantage?

Click here to read Codename: LAST BARREL.

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle.

With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.

By Bill Bonner Editor, Fat Tail Daily

[4 min read]

‘See that? That’s sh*t. 

‘And this... this is shinola.’ 

The Jerk 

We are reporting on a remarkable essay in the weekend Financial Times. In it, Ruchir Sharma explained what’s really ailing capitalism — too much government. 

As we saw yesterday, the ‘government’ — along with thought leaders in the press, politicians, academic economists, think tanks, the Deep State and Wall Street — have solved every problem that came our way... from the falling dominoes of Southeast Asia to the poverty and discrimination of Watts. But all this problem solving has left us with a much larger problem, $35 trillion worth of national debt.  

How will they solve that one? At stake is the entire world economy...the dollar...US prosperity...and the Primary Trend — the whole shebang.  

Here’s a brief resume of what we learned yesterday. 

Approximately 96% of the US economy was ‘capitalist’ in 1930. That is, people went about their business, as best they could, offering goods and services to each other. Then, the government (including state, local, and regulatory agencies) grew so much that only about half of the economy is now still free to do what it wants.

The rest is dictated by government budgets and regulations. As we’ve seen, almost all of this spending is squandered... on bombs, bailouts, and bamboozles. Beyond that, the whole economy is twisted into grotesque shapes by another arm of the government, the Fed.  

We saw that the much-criticised ‘small government era’ of the Tea Party Republicans... and the ‘deregulation’ following Ronald Reagan... never happened. Government spending and regulation increased steadily. 

Military spending (funding the empire) and domestic spending (social programs) and welfare for rich and poor alike — all increased. 

And it continues. Joe Biden has just given away $7.7 billion to voters who hadn’t paid their student debt. Donald Trump, meanwhile, is said to be offering tax cuts in exchange for campaign contributions. The Fiscal Times: 

‘Trump Woos Wealthy Donors With Promises of Huge Tax Cuts’ 

Who’s going to pay for Biden’s student loan forgiveness or Trump’s tax cuts? 

You are, of course. That’s how politics works. 

Capitalism benefits no one in particular... and everyone in general. Overall, things get better.  

Politics benefits specific groups — the elites — at the expense of everyone else. Overall, things get worse. 

Grosso modo, the more capitalism you have... the freer people are to get what they want honestly. The more politics you have, the more people ‘game the system,’ working out deals with politicians, and using the power of government for their personal wealth or aggrandisement.  

It’s either one or the other. Capitalism or politics. Sh*t or shinola. The idea that there is a happy balance of the two...or that adding more sh*t to the shinola makes it even shinier...is just nonsense. 

Large enterprises with lobbyists... and clerks... could manage Washington’s regulations and take advantage of its many bailouts, subsidies and other opportunities.  They grew bigger. 

But big businesses represent past growth. Small businesses are the hope of the future. And with the weight of government on their backs, small companies can barely crawl, let alone sprint.  

The rate of growth in productivity has been cut in half since the 1960s. At the top, big companies dominate major industries. At the bottom are the ‘zombies’ — companies that can’t even pay the interest on their debt. Weak and unproductive... like government itself, they waste valuable resources. In between, is a stagnant pool of mid-sized companies struggling to innovate and to survive in a hostile environment of laws, regulations, taxes, inflation and debt. 

But wait... Wall Street got rich. The 1% got richer than ever. Surely all that ‘financialisation’ and ‘inequality’ was capitalism’s fault, right? No, it wasn’t. Again, the feds are to blame. Sharma: 

‘The spring from which capital flowed was governments and central banks. Including debt and equity, the size of financial markets grew from slightly larger than the global economy [world GDP] in 1980 to almost four times larger today…The driving force behind runaway financialization of capitalism was easy money flowing from the government.’ 

Yes, it was the rotten money that ruined the barrel.  

But what now? Sharma: 

‘Their [US policymakers] overconfidence needs to be contained before it does more damage. Capitalism is still the best hope for human progress, but only if it has enough room to work.’ 

But there’s more to the story, isn’t there? It’s not just a matter of “overconfidence,” is it? The public may prefer shinola, but neither Biden nor Trump really sparkle, do they? 

Tune in next week...  

Regards,

Bill Bonner,
For Fat Tail Daily