The Age of Hard Assets is Upon Us – Fat Tail Daily

It’s eerily quiet on the China front.

Just 3 mentions of China on the front page of Bloomberg News, last I checked.

They’ve offered to mediate in the Iran conflict.

Meanwhile Brent crude is down to US$88 a barrel.

That’s Europe’s benchmark.

The US WTI measure of oil prices should be fine, but if Europe gets squeezed, that could change the calculus around Ukraine quite quickly.

Because as I said last week – Venezuela=Iran=Ukraine=China.

Wherever you look though, the headlines all point to fear.

This is why the mainstream financial
media isn’t to be trusted…

The big headlines will scream fear – because that’s what sells.

I awoke to oil rationing alerts on my phone.

No surprises there.

Yes, Australia barely ever keeps much traditional energy on hand, just a few weeks in fact.

Australians are likely worried about our oil supplies today – to say nothing of our gas supplies on the east coast.

Hopefully Iran serves as a kick up the bum to get our natural gas production situation sorted.

I won’t get bogged down in our incessant need to self-sabotage today.

But what if everything will be fine?

And what’s left for investors in the aftermath of the Iran conflict?

The answer: Commodities.

Hard assets.

Here’s the tell…

Russia and China have been remarkably quiet given the entire geopolitical board has been torn asunder in just a few months…

Which leads me to suggest that this is just the first phase of a multi-phase gambit by the US.

What follows was telegraphed to the market in Saudi Arabia a few months ago.

The US critical minerals tzar, David Copley, announced to the stage at the Future Minerals Forum that the US will commit “hundreds of billions” in debt and equity to the mining industry in the coming years:

Source: Youtube

It was serious, and it was a marker of intent.

This isn’t a test run.

The US is putting its foot down on the flows of sanctioned oil from Venezuela and Iran.

The next step is to go hard at the global mining industry to loosen China’s grip on the metals that run the world.

It’s part of the reason that BHP Group [ASX:BHP] is the only trade in town for the big end of the market.

Miners up, banks down.

That was my big call in my outlook for 2026.

I said:

Source: Fat Tail Daily

Since then, BHP has outstripped CBA handily.

The next step is to see if money starts to aggressively flow down to select ASX small cap commodities plays with projects in key jurisdictions.

It could be a massive lithium-boron project in Nevada, nice and close to the new US critical minerals stockpile in the desert.

Did I mention boron is crucial for nuclear reactors?

Or it could be Australia’s largest undeveloped hard rock lithium mine.

Yes, the Strait of Hormuz is the obvious chokepoint in the world right now.

But it’s the less obvious ones where opportunity could lie for investors.

The above are just some of the chokepoints I’m looking at right now.

Learn more about how I’m thinking in this presentation.

After witnessing one of the most volatile days in oils history, the question becomes, is that it?

Oil prices are prone to explosive moves at the beginning and end of major moves.

Just look at the spike in 2022 in the chart above when Russia invaded Ukraine.

That marked the end of the uptrend and the beginning of a four year bear market.

Analysing such a volatile move as we have just seen is of course tricky.

We are only 11 days into March and the range in oil prices has been from US$75 to $119!

But the usual rules apply.

You can see in the chart above that the 10-month EMA has just crossed above the 20 month-SMA.

The shift into long-term uptrend based on moving averages has had a very high strike rate of success over the past few decades.

Despite the big sell-off from the sell zone since Monday, oil is trading at much higher levels than last year.

The situation on the ground in Iran hasn’t changed. Trump has just tried to jawbone the price of oil down by saying the war is nearly over.

Perhaps we will see things wrap up over the next few weeks, but I don’t think the oil price will fall back below US$70 anytime soon.

Now that the long-term trend has changed, weakness should be seen as a buying opportunity.

US$81-86 should see strong buying support for now.

If that area didn’t hold and we saw prices heading into the mid-$70’s, I reckon it will be a no-brainer to increase oil and gas exposure around there.