Buy this Mining Corp Before Stagflationary Fears Become Reality
Right now, consumer demand strong, the economy growing, and employment is on the rise… But that won’t stave off stagflation very much longer.
A high inflation environment and a slowing (or stagnant) economy are right around the corner. Add that to the Fed raising rates this month and it’s not looking good for stocks.
Well, for most stocks. The topic of today’s video, one of the largest mining companies in the world, may be an exception to that rule.
You can learn more by watching today’s video or read the transcript below.
03/15/2022 $100 Tuesday Transcript:
Hey everybody! Shah Gilani coming to you with your Take It to the Bank Tuesday, where I recommend what you should do with $100 today. As in, right now.
Well, I’m recording this in the middle of the day Monday. The DOW is down right now. It looks like it’s going to turn around – and not in a good way. The S&P 500 had a good start today, then turned around. Who knows where we’re going to close. The Nasdaq Composite was up half of a percent, and now it’s down 1%, so… Sloppy markets.
Part of the problem (that we know of) is that Fed is going to meet on Tuesday and the day after. We’re going to find out on Wednesday just what they are going to do with interest rates.
We already know – it’s a given – that they’re going to raise benchmark federal funds rate by 25 basis points (or a quarter of a percent). They’re not going to raise the 50 basis points because that would freak out markets. They’ve already telegraphed that.
But there is something else. The markets have a deep-seated fear of something called “stagflation.” What’s when we have a stagnant economy – in other words, economic growth.
We don’t have that just yet, but a lot of analysts think we’re heading in that “slowing” direction. And, we’ve probably seen peak earnings as far as corporations in Q4/2021. If that’s the case and we start to see the economy slow or stagnate at the same time we see rising inflation and inflationary expectations… Well, we’ve got the dreaded stagflation.
Are we there? No.
Are we headed there? Yeah, I think we sure are headed there.
This time it’s not going to be as bad as the ’70s, but it’s still going to be bad. We’re not seeing the kind of pressures we saw back then, though we are seeing the kind of oil pressure we saw in the ’70s. But, this time, we’re seeing demand push prices because demand is strong. Yeah, unemployment is down 3.8%. The economy is doing well.
The problem is, which there are plenty of people looking for jobs, there are more jobs than people looking for those jobs. The labor participation rate is really low.
What does that mean? We’re likely to see rising wages to attract people to those wanting jobs. Wow… Rising wage helps give people more money to buy more (or pay up more). That gives everybody with “pricing power” the ability to raise prices on the products they sell.
That’s the recipe for stagflation: rising prices based on some of the things I just mentioned mixed with a slowing economy.
Why else would we see the economy slow? Well, if the Fed overshoots its boundaries (and it tends to do that) and it raises rates too high, that will induce a recession.
So sure, it looks like we’re heading down that path. Not very good for stocks… A mixed bag at best. Gold, which has traditionally done well, may no longer. Back in the ’70s, when we just got off the gold standard, gold was still a hot thing. I don’t think it’s going to perform as well.
If you own some gold, hang in there with it. But second to gold – and more historically relevant… Commodities do really well during stagflation-inflation periods.
And I’ve got a hot one for you today.
I talked about the soft commodities – agricultural commodities – last week. Today, I’m going to talk about hard commodities. Iron, iron ore, iron pellets, manganese, copper… Gold is included in there, as is silver and nickel.
Who does all that? Who minds all that?
Vale S.A. (NYSE: VALE).
You want to own this stock. So, for your $100 today, you want to buy a hundred dollars’ worth of Vale. VALE is the symbol.
This is the biggest miner on the planet. It is incredible profitable and, at $18 a share (where it is trading right now), the dividend yield is… Are you ready for this? It’s 13.96%. Let’s call it what it is: 14% dividend yield. The company pays you 14% to hold the stock.
Also, if you buy down here at $18, you’re going to see this stock climb. I think you’re going to double your money in 18-months. So, for you $100 today, go buy yourself some Vale S.A.
Take it to the bank, folks.