President Biden wants to unleash $4 trillion in stimulus.
That’s on top of roughly $2 trillion the feds have already spent on COVID relief.
So it’s no surprise that the commodity sector is heating up.
You can’t print more lumber, oil, or copper – all of which are rocketing higher.
But as you’ll see in your Weekly Pulse video, commodities still have a long way to climb.
So if you don’t own some of these inflation-proof assets, now is the time to add them to your portfolio.
Find out all about it in your Weekly Pulse video above, with me, Chris Lowe, and host Tom Beal.
And if you prefer to read along, we’ve included a transcript of our conversation below.
Editor, The Daily Cut and Legacy Inner Circle
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Tom Beal: The U.S. government has already printed trillions of dollars in this past year. And there are trillions more coming, with the upcoming plan that President Biden has in store for us.
What does that mean for your wealth growth and protection?
My name is Tom Beal, host of The Weekly Pulse, where we break down the biggest wealth-growth story of the week.
I’m here today with Legacy Inner Circle editor, Chris Lowe. So Chris, where do we begin in today’s discussion,
Chris Lowe: Today, we really need to tackle something that’s been building up on my radar… and, I think, building up in a lot of people’s radars… which is this big spike in commodities prices.
I’ll just start off with something that I think a lot of people will understand. I looked at some figures. A year ago, April 2020, the cost of building a 200 square foot deck with lumber was $936. If you wanted to build that same 200 square foot deck today, it’s nearly $4,000. It’s just gone to the moon. It’s incredible.
We also have things like palladium and iron ore hitting all-time highs. And copper and aluminum have hit 10-year highs. They’ve doubled from their lows one year ago. So we’re talking 100% gains in copper and aluminum.
So today, I thought we’d look at what is sending commodities on this march higher. And also, I thought, we’d look at how much higher can they go? And very importantly, what can folks watching this do about it?
Tom: This week’s episode is brought to you by Legacy Inner Circle. We have four brand-new reports. These are the four megatrends that are happening right now. And you want to get your hands on these reports. These are from the experts that Chris Lowe has access to in each of the megatrends to share where they’ve been, where they are now. And most importantly for you and your future wealth, where they’re going and how you can benefit from them.
So click the link below, go learn more about Legacy Inner Circle and see the special deal that Chris has in store for you. For less than a venti at Starbucks, you can get your hands on these four megatrend reports and access all that’s waiting for you inside Legacy Inner Circle. Go get that. We’ll see you inside the members area in the iOS and Android app. Now, back to this week’s episode…
I, too, saw that deck example. My mind was just blown. And that’s one of many examples. The good news is that there are ways to benefit from it. And I’m excited to hear how. Because we are feeling that as a residual of the prices we’re paying for certain things. The deck is one example. But many other things are down the road.
So I’m excited to hear how we can take this new thing occurring and possibly grow our portfolio during this interesting time that we’re in.
Chris: That’s right, Tom. And I think before we get to what to do, we should look first at what’s going on here. It’s pretty simple, really. There are a lot of moving parts. But if I were to break it down Weekly Pulse style, I’d say the two big things are, you’ve got the recovery, and the vaccines are rolling out across the U.S. and other parts of the world. We’re just moving out of that COVID slump we’ve been in for so long.
The other part of it is all the stimulus spending that’s going on. It’s going on around the world. But for the purposes of this video, we’ll just look at the U.S. And here’s a handy chart that I pulled up from the Legacy analysts:
The proposed spending… all the stimulus projects the Biden Administration is coming out with, that’s $4 trillion in total. Now, if you look at the War on Terror, and this is all inflation-adjusted dollars, the U.S. government spent $2 trillion on that. So we’re talking double what they spent on the War on Terror.
If we go back to the 2008 financial crisis. I was around then; I was working at Legacy. I remember thinking, “Whoa! There’s so much stimulus.” That was $1.2 trillion. So we’re at four times 2008.
And then I went all the way back to the New Deal and FDR in the 1930s. That spending was actually less than $1 trillion.
So we’re just in these vast numbers, in terms of stimulus.
And then, of course, there’s also been supply disruptions due to COVID. So that has got a lot of folks thinking that we’re in a commodities super cycle, which is really a long-term, highly bullish move higher for commodities.
Tom: To see what this new proposed budget is in that chart, it’s just mind-blowing. The War on Terror is just the most recent one. Obviously, that was a huge endeavor. And we’re doubling that. So it’s no small potatoes that we’re playing with here. This is the big show.
Chris: Tom, I’ve had a thesis going back to the start of the year that there’s going to be a rally in scarcity. What I mean by that is that anything that isn’t printable, like U.S. dollars, anything that has some scarcity values, I’m talking, you know, all of the commodities right there, they’re all in limited supply.
They all take a lot of energy and cost to get out of the ground. So that makes them sort of inflation-proof, if you like. They just can’t be printed up like U.S. dollars can. And that’s a really important point.
I pulled up a chart of the Bloomberg Commodities Index. That’s a broad index of different commodities that are commonly traded.
We’re actually not that high up on that index. Today, that index stands 90.
It has gone up a lot this year, but it’s only half of where it was after the 2008 financial crisis.
And that tells me that there’s a long, long way to go in this supercycle.
And that idea that I had at the beginning of the year of the rally in scarcity is really playing out in commodities.
And by the way, Tom, it’s also playing out in bitcoin. I think that’s a big reason why bitcoin has gone up so much, because it’s also scarce, as we’ve talked about in recent videos.
Tom: And that chart shows me that we’re not even near the top. So like you said, there’s a long ways to go. I was expecting to see we’re maxed out. But we’re not even close to the top.
Chris: And I think it’s really important. If you look at that chart that I just showed on the screen, if you look at it just for this year, it looks like this crazy upswing.
But actually, when you pull back and look at the big picture – and remember, one of the things we like to do at Legacy is look at the big picture – we’re only halfway to where we were after the last crisis.
So we’ve seen these incredible run-ups. Lumber is the one that’s really gotten a lot of folks’ attention. Huge runups.
But when you look at the overall sector, commodities are just around half-way to their highs that we had a decade ago.
So I think the lesson is for folks listening to and watching this, there’s a long way to go yet across the commodity sector.
So what can you do as an investor faced with all the stimulus that’s coming out of the Biden administration, faced with this reopening of the economy and this heating up of the economy?
I looked back to the 1970s as a kind of a proxy for what we might want to be owning today. The 1970s was the last big inflation in the U.S. Oil prices spiked famously in the 1970s. And you got double-digit inflation in the U.S.
What happened in the 1970s to asset prices? Well, this next chart tells a story.
Gold went up 30% over the decade. Commodities went up 24% over that decade. But look at the S&P 500, right over on the right – 1.6%. Treasury bills – 6%.
So what you can see from that last inflationary cycle is that commodities did very well. And that is simply because they’re scarce assets. They can’t be printed. They can’t be created by government. And that gives you an idea where things are heading this decade.
Tom: It does. And thank you for showing that chart. My mind is racing on that. One thing that comes to mind is back in the 1970s, there wasn’t a cryptocurrency. There wasn’t bitcoin, etc.
So I’m curious. Maybe that’s something we could talk about in some further episodes. But will gold have that large spike that it had back in the 1970s, now that there’s something similar to the digital gold with the cryptocurrencies bitcoin and the others?
Chris: Tom, it’s a great question. I know we’ve talked about it before. Teeka Tiwari, our cryptocurrency investing expert, he said, “I think bitcoin is going to take over some of that role for gold.”
Tom Dyson, another colleague, who’s a big-time gold investor. He has an advisory all about investing in the gold bull market he sees ahead. He’s a gold guy, right?
My own approach to this, Tom, is to split the difference. I think as long as you’re aware that what’s happening now is a rally in scarcity – house prices, artwork, commodities, gold, bitcoin. I don’t really care what it is. All I’m trying to get across here is that that’s the mindset I think you have to have in this decade, with all this stimulus coming on board, with the economy opening up.
You’ve just got to think what’s scarce and what’s abundant. Right now, the U.S. dollar and other currencies, the currencies the governments issue, they’re in abundance. There’s trillions and trillions of dollars of these things being created by governments.
On the other side of that equation, you have these inflation-proof, scarce assets that I believe are going to do very, very well in the face of all that stimulus.
Tom: Thank you for bringing this to my attention. Commodities were off my radar. It now is on my radar, thanks to your discussion today and bringing this to my awareness. And I hope this is helpful to Weekly Pulse subscribers.
That’s what Chris brings to you each and every week here at The Weekly Pulse. So, Chris, thank you for bringing that to our attention today. Anything else to add before we wrap up this particular discussion?
Chris: I think that’s it. We talked about bitcoin. But the focus today really needs to be that there is something very, very big happening. You said it’s off your radar. It’s off a lot of people’s radars. Commodities just aren’t this sexy investment. You know, they’re not this new thing, like bitcoin.
But I really think it’s a very good time to start to look into those things. Look into your portfolio. What kind of scarce assets, tangible assets, things you can hold onto, are in there? And if you don’t really have much of that, I would suggest that you start to add in something. Whether it be gold or bitcoin or a commodities fund, just make sure that you are holding something that’s scarce in a time when fiat money is in abundance.
Tom: Very wise words. Thank you, Chris, for your wisdom here in this week’s Weekly Pulse.
Chris: Thanks Tom.
Tom: If you’re still here, that means you’re not yet a member of Legacy Inner Circle. And what you just witnessed is the tip of the iceberg of what Chris brings to you on a weekly basis, deeper inside the Legacy Inner Circle, where he has access to all of the experts within the Legacy Research group.
Today’s topic was about commodities and scarce resources. But he has the oversight of all the different model portfolios. And each week, he brings what he feels is the most important topic for you to look at.
So, Chris, for those who aren’t part of Legacy Inner Circle yet, how can you share now, in these unique times, is the absolute best time to take a look and join us inside the members area?
Chris: Tom, I’m not a commodities expert. I’m not a guy who spends a lot of time exploring for metals. I haven’t worked in the industry.
But guess what? I know somebody who is. He’s called Dave Forest. He was handpicked by Legacy Research co-founder Doug Casey to lead up Casey Research’s commodities advisory service. It’s called Casey International Speculator.
His sole mission with that advisory is to guide his readers through this commodity supercycle, so that they can maximize their profits. And they’ve done very, very well so far.
So if someone’s just coming to this for the first time, what I’d say to them is that by joining Legacy Inner Circle, you get to have those experts in those areas that are doing well in the market when they’re doing well, or even before they start to do well.
Copper is up 90% this year. Dave has been banging that drum for over a year. He put it on my radar a year ago. I was thinking copper, I don’t know. It was off my radar. But lo and behold, here we are one year later, and copper is up.
So having someone like Dave. He is a trained geologist. He actually goes out and develops mines. He finances mines. He just understands commodity cycles better than anyone I know.
I’m not an expert in all of these things. I’m not an expert in crypto. I’m not an expert in any one of these things. I’m a sort of Jack-of-all-trades.
But we employ some of the best independent minds in those different areas of the market. And Legacy Inner Circle, frankly, is the best way to access all that information in the one subscription.
Tom: 100%. Below this video is a link to click on. Go watch the video to learn more about what Legacy Inner Circle has in store for you.
And then take a look at the special offer Chris has to join. You’ll see you have everything to gain and absolutely nothing to lose – for less than a Starbucks venti coffee, you can join Legacy Inner Circle and all the value it has for you.
So click the button, go take a look, join, and we’ll see you inside the members area as well as the iOS and Android app.
Thank you. And thank you, Chris.
Chris: Thanks, Tom.
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