Nickel Stocks to Fly When the Bullets Do

Unfortunately, while no sane person wants war, the world is inching ever-so-closer to a military conflict. Tensions across the Middle East, the South China Sea and North Korea are rising.

Reuters reported on 29 August:

North Korea fired a ballistic missile over Japan’s northern Hokkaido Island into the sea early on Tuesday, prompting warnings for residents to take cover while provoking a sharp reaction from Prime Minister Shinzo Abe and other leaders.

The test, one of the most provocative ever from the reclusive state, appeared to have been of a recently developed intermediate-range Hwasong-12 missile, experts said. It came as U.S. and South Korean forces conduct annual military drills on the peninsula, to which North Korea strenuously objects.

Kim Jong-un is living dangerously. Not that the dictator cares much. The North Korean leader risks being overthrown if he shows weakness. That’s why he’ll go ‘all the way’ in my opinion, similar to how Adolf Hitler and Joseph Stalin acted during the Second World War.

The threat of another war is real.

Arguably, there is one metal more important than any other when it comes to military applications. I’m talking about nickel. Nickel is a vital component in ammunition, tanks, helicopters, rifles, and thousands of other military supplies. I believe it should outperform if bullets fly in the years ahead.

History repeats

Heading into the First World War, nations were overleveraged and economic growth had crashed.

Take note: The world hasn’t changed today.

Around the globe, people are vocalising their displeasure towards their government. There’s a clear division between the alt-right and alt-left. Police forces are protecting governments from this rising discontent. Never-ending corruption scandals and rising taxes are to blame.

Seeing the similarities between today and 100 years ago, there’s good reason to believe history could repeat. A global war is being prepared by the elites of the world.

And while that’s difficult and uncomfortable to imagine, it’s far better to be prepared. Talking about finances in the same breath as global war may seem unsavoury, however, I’d rather be realistic.

Like it or not, we’re powerless to stop the conflict that’s coming. And, all things being equal, wouldn’t you rather be invested in the stocks that’ll thrive?

Much like the Vietnam War, the scarce supply available in the nickel market will send the spot price through the roof. Nickel stocks could see hundreds, or in some cases thousands, of percent returns.

China won’t stop either North Korea or the US going to war. The Global Times (Chinese government’s mouth piece) reported on 11 August:

Beijing is not able to persuade Washington or Pyongyang to back down at this time. It needs to make clear its stance to all sides and make them understand that when their actions jeopardize China’s interests, China will respond with a firm hand.

China should also make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral. If the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so.

Chaos is coming, social unrest is erupting, and geopolitical tensions are rising. Is your investment portfolio prepared for the worst?

Game plan

I’m not saying that war will break out soon. I merely believe the risk of a war should keep the nickel price higher. Remember, while no sane person wants war, the situation should be good news for the best nickel stocks. I’ll keep tipping nickel stocks for that reason. That is, as long as I can find suitable opportunities.

It’s a tough job…

I want to tip stocks that don’t entirely rely on the nickel price going up. Take a look at the price chart of one of Australia’s largest pure-play nickel stocks below. Given that this company produces high-grade nickel, shareholders are banking on the nickel price going up. Here’s how the share price has traded this year:

nickel


Source: CommSec
[Click to enlarge]

This company has jumped 43% since mid-June. Shareholders started to benefit at the exact time nickel prices started to take off:

nickel


Source: kitometals
[Click to enlarge]

If nickel soars with war breaking out, this company could get a double bang for their buck. But if that doesn’t happen, the company’s share price could drop like a rock.

That’s not a great risk-reward profile. Instead, it’s best to look for undervalued opportunities in the nickel space. I’m talking about stocks that can make you money, even if the nickel price doesn’t surge higher. These are the opportunities that potentially make for a juicy profit.

That said, there’s only one stock that fits the bill based on my analysis. I believe that won’t be the case soon. The company is awaiting news, due any moment now, which could put a rocket under its share price.

For more details go here.

Regards,

Jason Stevenson,
Resources Analyst, Resource Speculator


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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