Base Metals: The Technical Break-Out No One’s Watching

One chart should have your attention right now:

Source: TradingView

[Click to open in a new window]

If you need clear evidence that the door has just been opened on a new commodity cycle, well, this could be it.

So, what does it depict?

The recent surge in silver prices… Nope.

Platinum? No.

Or maybe some other obscure critical mineral that Trump recently spruiked as key to his America First ambition?

Again, no.

This is a chart of bread-and-butter commodities in the resource market. Commodities that don’t typically make headlines.

The mainstay metals, things like aluminium, tin, nickel, zinc, and copper. Or what we call ‘base metals.’

Base metals are the building blocks of modern civilisation. They don’t come with the fanfare of critical minerals or the fixation towards monetary metals, like gold.

Just think: the hardening characteristics of nickel-iron alloys are key for making bolts, saws and drill bits.

Or zinc alloy roofing, the mainstay choice for modern buildings.

The aluminium framing that supports windows and sliding doors.

You get the point: base metals are the rawest, simplest of commodities.

They serve up little fanfare, but are crucial for the modern economy.

They’re the basic material for housing, office blocks, warehouses, and planes.

But all of a sudden, the global economy is willing to pay a lot more for these nondescript metals.

We’ll try to unpack ‘why’ over future editions.

The iShares Global Base Metals Index [TSX: XBM] is up over 25% over the last few weeks.

But more importantly, it is breaking through all prior resistance levels, including the temporary surge from 2022.

As I detailed to my paid readership group last week and highlighted in Mining Memo all last year, this is the setup we’ve been anticipating for some time.

As you know, gold leads in the upward turning of the commodity cycle; from there, the cycle broadens. Other metals follow.

That has been our core game plan, and what I’ve positioned my paid readership group for… A focus on (previously) unloved base metal stocks.

So, what happens next?

If you missed the gold run, if you missed the silver surge, if you missed platinum tear higher, and for that matter, rare earths, lithium and copper, last year…

Well, there are still areas of this market where you’re not exposing yourself to excessive risk; in other words, value opportunities.

That includes the base metal stocks, energy and even agriculture.

But adopting a value strategy and anticipating the further ‘broadening out’ of this bull market means you can also look at smaller-cap stocks.

Principally, the explorers, particularly those with undeveloped deposits sitting on their property.

These companies tend to move later in the cycle, and for their patience, investors can be rewarded with returns that far exceed the large-cap producers.

That’s how I see this market playing out this year.

Of course, it won’t be a smooth ride, given the geopolitical backdrop.

That’s why you should use volatility to your advantage, jump on any temporary sell-off from now on as your springboard to build positions in the next major commodity movers.

I’ll have more to say on that later this week.

Stay tuned.