Last week Callum and I showed you three lithium stocks we thought were ready to start running again. Those stocks were up between 5 –13% this week.
Copper and rare earths are also starting to run as Trump begins moving to shore up US critical metal supply chains.
He is making it clear that he is willing to ignite inflation to rebuild supply chains that aren’t beholden to China.
He’ s adding a whopping 50% tariff to copper in August, and the US government just became the largest shareholder in one of two ex-China rare earth suppliers.
MP Materials [NYSE:MP] jumped 50% on Thursday after the news of the investment, and the other rare earth supplier Lynas Corporation [ASX:LYC], flew 17% today in response.
I am quite happy about that, having sent a trading alert to buy Lynas less than three months ago.
The spike in the copper price to a new all-time high has me concerned because it could be hot air based on front-running the tariffs.
Will copper collapse back to earth in August and shake out unsuspecting punters?
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Long-term demand and supply expectations remain incredibly bullish for copper. So we should be ready to take advantage of any short-term weakness caused by the tariff kicking off in august.
There will be plenty of news over the next month as Trump starts announcing which countries will be hit hard by the tariffs.
I can honestly say I don’t have a clue which way markets will break from here. We could see stocks go vertical into a blow-off rally. Or a false break of the recent all-time high in the S&P 500 could occur and set off another wave of selling.
My approach to handling a situation like this is to hold onto what we have and hope the rally continues, but I remain wary of adding too much risk at this point.
If the melt up rally begins there will be plenty of opportunity to add more positions. And if the music stops you are safe because you haven’t added positions at bad levels.
So check out today’s instalment of Closing Bell and be sure to give us a like if you managed to jump onto those lithium stocks before they blasted off!
Regards,
 |
Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps
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