Dirty, Vile, Wicked Coal: Offers the Perfect Countercyclical Investment

Today, we’re talking about the most vile of commodities…

A resource that’s undone governments after they miscalculated the universal hatred for this single thing.

Something so despised that it’s become bad form to even mention the word in public.

Of course, I’m talking about coal.

I go to a few mining conferences each year, and occasionally, you’ll see a coal company at one of the stands in the meet-and-greet areas of the conference hall.

Usually, the coal company is placed far away from the centre of these events… Sitting in a quiet, awkward corner, usually with some sombre-looking director at the helm.

But sometimes these coal companies have ‘green-washed’ their name, cutting out the word ‘coal,’ and substituting it for ‘energy.’

That sometimes causes a bit of confusion at these events; an unsuspecting attendee stumbles into a conversation with one of the directors…

But after a few lines of questioning, it soon becomes clear that this is just a dirty, filthy coal company.

And so they shuffle on, looking behind them to make sure no one noticed.

The coal director slumps back down into the chair.

The Ugliest Duckling

The first time I recommended a coal company to my paid readership group, I had to take a deep breath.

A lot of investors like the sharp edge of a critical metal stock, one that has a neat supply-and-demand dynamic, usually tied to some great need in AI or renewables.

Few have much appetite for a morally bankrupt commodity like coal.

But here’s the thing….

Without coal, the global economy is stuffed.

Any doubt about that was put to bed this year after oil flows halted from the Strait of Hormuz.

Coal has been the ballast for the global economy. It filled the critical energy gap for Asian countries that were running low on petroleum.

Coal was the only fit-for-purpose substitute as oil and gas supplies ran short. It stabilised what could have become a runaway energy crisis.

Without coal, many more cities would have gone dark, leading to mass hospital closures, civil unrest, and no doubt, deaths.

As events earlier in the year showed, coal doesn’t just provide stability for the global economy; it saves lives!

And now, buyers want more of it.

But is this a temporary trend?

That’s the conventional wisdom…

Once the war ends, demand for coal will plummet.

But I view coal differently; you see, the longer the war in the Middle East lasts, the more countries will become entrenched and reliant on coal-based power generation.

Systems are adapting, and so far, coal has been the clear winner as countries turn to an easy, cheap, fit-for-purpose commodity that comes with LESS geopolitical vulnerability.

Coal is winning in the energy race.

While most think of this as a temporary measure, what if it isn’t?

Is coal entering a new era of long-term demand growth? That’s certainly an idea worth keeping in mind as countries seek reliable energy sources to fuel future productivity.

And now may be the perfect time to join in.

Right now, coal stocks are easing into a pattern of price consolidation after tearing higher on the back of the war in the Middle East.

Prices have eased, and so too has speculation. In my mind, those are the ingredients that make this a potentially rewarding long-term play.

Coal offers a genuine countercyclical opportunity.

It was a ballast for the global economy during the peak of the Hormuz crisis; equally, it stabilised losses for any portfolio that happened to hold coal stocks, which we did.

So, before closing out, you might be interested in seeing how we’re putting these ideas into action in our model portfolio and positioning for the next round of market volatility.

You can find out more here.

Until next time.