A Bull Market in Big Brass Ones

When we compliment someone with a lot of courage, we say he has “big brass ones” or “a lot of brass.”

But what is brass, anyway? There are no brass mines. So how do you get this metal?

The answer to that question contains some real profit potential …

Likewise, when someone gathers their courage to act, they “galvanize” around that issue. That’s from galvanized steel, I imagine.

So, do you know what galvanizes steel? The answer is zinc.

Thin layers of zinc added to steel make it rust-proof, or above reproach. Galvanized. Better than the original. About a half the zinc produced in the world goes into galvanized steel.

Likewise, zinc combines with copper to make brass. That’s the second-most-common use of zinc.

Well, there must be a lot of galvanized individuals with big brass ones walking around. Because the price of zinc is on fire! 

And here’s the funny thing. You can’t log on to any news site without reading yet another story about how copper prices are soaring.

Copper is the darling of the base metals. Well, hold the phone. That’s because zinc has outperformed copper since the start of the new bull market at the beginning of 2016. Look at this chart I just snagged from my Bloomberg terminal …

Zinc is the white line; copper is the orange line. Copper is up 96.6% since the start of the new bull market. Not too shabby! But zinc jumped a whopping 121% at the same time. Wow!

The question for investors is, will this trend continue?

Let me show you another chart that might answer that. This is a 10-year chart of zinc held in London warehouses (the bars) against the price (the while line again).

You can see that when stockpiles go down, prices go up.

Zinc stockpiles are shrinking now. And that is lighting a fire under prices.

What the heck’s going on here? A couple of things …

Some big mines closed. They ran out of zinc they could mine at economical prices.

Now, you might think they can just switch the lights back on. You’d be wrong. Shutting down a mine is a big decision, not done lightly. It will be a long time before someone rattles the locks on those doors.

Also, China is cracking down on polluting industries. And metals mining and refining pollutes a lot. Small wonder, then, that Chinese imports of zinc jumped 22% year-over-year.

All this leads to my next point: Zinc juniors are going to get more popular.

I’m talking about companies like Fireweed Zinc (TSX-V: FWZ). That’s a company advancing the MacMillan Pass zinc-lead-silver project in Canada’s Yukon Territory.

Indeed, MacMillan is one of the world’s largest undeveloped zinc resources.

I’ve known some of the executives of this company for years. Ever since the days when I was young and handsome, chasing around Mexico. And that was a LONG time ago.

But I’ve also met some of the leadership recently. At the Metals Investor Forum in Vancouver. In the following video, I interview Brandon Macdonald, the CEO of Fireweed Zinc. Watch it here: https://youtu.be/QREQW02Rrn0

Mr. Macdonald talks about the long-term structural deficit in zinc. And how his company is uniquely positioned to take advantage of it. AND the company just published a new resource estimate.

This is not a recommendation. I save those for my paying subscribers. But you would do well to educate yourself on this market, and maybe place some bets on what companies are going to do well in the ongoing bull market.

It takes a lot of brass to try and build a mine. And for economic reasons, zinc mines must be big.

But this is just the kind of market that can make those kinds of bets pay off big-time. In this market, it pays to have big brass ones, indeed.

All the best,
Sean Brodrick

P.S. There is still plenty of opportunity in gold, too. Some gold miners are already posting gains of 6,400% in this commodity bull market. Here’s how you can benefit from this metals-buying bonanza.

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