Move Higher: Is Energy the Ultimate Inflation Hedge Right Now?

[00:00:01]Hey everyone, hope you're having a good day. My name's Andy. My channel's finding value. Today we're going to go through Twitter, see what people are sharing on social media. I'll interject my financial opinions as we go through it together, generally related to three different topics, wealth building, commodities, and or financial topics.

[00:00:18]So, let's dive right in, take a look, see what's going on today. And if you want to follow me, it's financing.com.

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[00:01:08]All right, so GDX is following the bullish setup we highlighted in our previous post where price found support blah blah blah. So, he's got this potential falling wedge. He has a support line there. Uh, and he says GDXJ is looking good.

[00:01:28]What I do is I do a lot of the ratio stuff. I like pricing an asset versus an asset to see what it looks like. Now, we're in a rising interest rate environment.

[00:01:40]We broke out of the 2-year yield, 10-year yield, and 30-year yield formations that are very similar to this formation. It's a big pennant formation that we've broken to the upside on every single one.

[00:01:56]I would guess that inflation sensitive assets could potentially outperform these GDXJ and potentially uh precious metals miners and stuff like that.

[00:02:13]The way that you kind of check to see if that's occurring is you go into some ratios. So what I did is I put coal ETF versus GDXJ.

[00:02:25]The Cole ETF was underperforming you can see here uh historically and has recently broken out against GDXJ.

[00:02:38]Do you know what we've been buying on the website?

[00:02:46]These types of companies. We can also price a different one. Perhaps we can do PSCE divert against GDXJ.

[00:02:56]And then you back way out your cycle.

[00:02:59]Your cycle where PSE outperformed was all the way down here all the way up into 2014.

[00:03:09]We had a monstrous pullback in a falling wedge.

[00:03:15]There it is. That's the falling wedge.

[00:03:18]September, October is where I loaded up in a lot of um oil and energy producing companies.

[00:03:29]It was because of this particular ratio, not just this one, but a bunch of different ratios suggesting that this here is a very good entry point. You draw a line across. So, this is kind of your double bottom. So, your first bottom here uh is the 2020 bottom. Your second bottom that we've got uh has been created and we can throw another falling wedge type formation uh very similar to what we've got going on here. So, falling wedge number one, falling wedge number two. This is your ultimate peak uh for that particular cycle. This is your ultimate bottom for this particular cycle. We've broken out of this bottom and are heading higher.

[00:04:22]So, I'm in the camp that we're in a inflationary impulse move higher and that energy companies uh are most likely going to outperform the mining companies. So, if you listen to the midweek updates, when I talk about particular companies that we're investing in, uh, this is in the back of my mind when I talk about these things. And there are other sectors too that are incredibly cheap that are bottoming and are working their way against perhaps some of these other sectors that people are still bullish on. Uh, it's a I I was going to say it's a linear mindset versus a lateral mindset.

[00:05:04]Lateral mindsets are looking for bottoming patterns and and changes.

[00:05:09]Linear thinks that you look back the past few years that it's going to continue into the future. Uh, a linear guy is going to look at it and say GDX is the one that you want to be in or GDXJ in this case. I'm in the one saying energy is the spot to be based off of the charts. We can also look at energy service and what you're doing is you're stacking a bunch of different uh assets, you know, sectors against it.

[00:05:35]And again, I think that this is a falling wedge into a double bottom and uh O has the same thing and that we've got our another falling wedge formation there. So, it's it's the same thing. And whenever you get to these low spots in the ratio, like down here, those are generally good spots to buy whatever the numerator is uh in it. And conversely, if it's doing the opposite where it's got like the big double top and you're going to come back down, it's good to buy the tops up here of whatever that denominator is coming down. So, Robin Brooks, let's see what this guy says. He says some crazy stuff. You're better off holding the S&P 500 these days than gold. The S&P 500 offers better returns and is a safer store of value. The safe haven status of gold is severely tarnished by how it's traded in recent months. That's going to cause permanent dam. Is this guy being serious? I'm being serious. Does this guy have brain damage?

[00:06:52]Are you really going to say that gold is severely tarnished by how it's traded in recent months?

[00:07:00]That's the stupidest thing I've ever read in my life. I mean, does this guy have brain damage?

[00:07:06]And then to go off and say that you want to hold the S&P 500. Well, let's let's look. I mean, come on, guys. These people exist.

[00:07:18]This is like the most bullish chart in the history of bullish charts.

[00:07:24]Let's get the Oops, I don't want that one. Let's get the uh line chart going.

[00:07:29]I do that all the time. This is a double bottom. What are we What is he talking about? What is this guy smoking?

[00:07:36]So, what you want to do is you want to invest in the S&P when it's like up here. That's like 1979, 1980. that would have been a great time to load up on the S&P. Um, in the 30s would have been a great time to load up on the S&P. Gold, the best time to load up on gold was like the 60s and early 70s. Another one in the early 2000s and then again just recently in the 2020s.

[00:08:05]What the heck is this guy talking about?

[00:08:08]See, this is where you got to get to that status o or maybe not status where you get to the conviction or the ability to rely solely on your own thoughts and opinions. I read some of these tweets and I'm like, "This guy is an absolute moron."

[00:08:29]And that's how you lose money. You follow morons, you do moronic things, and it doesn't work out in the long term. Uh, I think this is going to go all the way back up. Uh, based off of all the bottoming patterns that I see in commodities versus financial assets, how cheap they are, uh, an increasing interest rate environment, on and on and on and on. It's all interconnected.

[00:08:51]So, this dude is a 100%.

[00:08:56]Uh, Kristen Shagni, I think that's how you shessie. I don't know how you pronounce it. We're raising alarm bells right now. American Petroleum Institute CEO Mike Smers. The oil market can't run down to the last drop like your car can.

[00:09:14]Below a certain threshold, pipelines can't maintain pressure and refineries can't deliver all the various fuel grades their customers demand. Once you get to that point, then you'll see prices shoot up. Well, that's his opinion. So once you hit those critically low inventory levels where you literally lose pressure in pipelines, uh he thinks that that's the time the price will shoot up.

[00:09:43]Days of supply of US crude oil, including the strategic petroleum reserve, close to the lowest level in decades going back to 1982.

[00:09:54]We are at some ridiculously low levels for inventory, including the strategic petroleum reserve. Looked like we were up quite a bit in 20 uh 1920.

[00:10:07]We drew that all down and now we're at the lowest levels. I don't see how this isn't bullish, guys. I just don't see.

[00:10:13]And I've heard people say, "Oh, we're going to go back down to $50 a barrel."

[00:10:18]$50 a barrel? Really? You really think that? I mean, let's just circle these guys up. We can have Robin Brooks run the crew.

[00:10:28]I mean, come on, guys. What is going on with some of these people? I I mean, I thought common sense kicks in at some point. Like, you don't even need to be an expert. You're at these lows, inventories are depleted, and you're like, "Yeah, we'll just go below the cost curve for the hell of it." I mean, why not, right? [laughter] Okay.

[00:10:50]Uh, Elliot Wave International, what if 2 and a half% inflation is no longer the target, but the floor? The latest inflation data may be signaling something more significant than a temporary surge in energy prices. 100% after years of extraordinary monetary stimulus, inflation could be settling into a structurally higher range.

[00:11:14]Understanding long-term trends, not just short-term headlines, is essential for investors investigating or navigating today's markets. I agree with that. I think that this is going to be above that and we're going to break higher.

[00:11:27]100% agree. And this this part chart right here, I mean, this chart is literally if we were to pull up like Newcastle gold futures, it's the same stinking chart. Uh that's the the lower portion. That's what this is over here.

[00:11:41]you get the breakout of inflation, the breakout of inflation. And this is a retest in a shoulder head shoulder bottoming pattern which is over here.

[00:11:49]It's the same chart. Uh you can do the same thing with a bunch of different other uh stuff. You know, TTF gas has the same chart.

[00:11:57]There's TTF gas. It's it's all the same thing. And these are the drivers of inflation. And this is the inflation that they quote watch. And then they manipulate it lower so it looks a lot better. That's the way that they're doing it.

[00:12:14]Uh Lucas says, Rick Rule, the world has s systematically underinvested in oil.

[00:12:21]The oil industry is underinvesting in sustaining capital by at least 1 billion dollars per day. This underinvestment will reduce future oil production. Oil is a cyclical industry and a sustained period of underinvestment will lead to lower production in the future. We are still in the underinvestment period despite high prices. In addition to the massive underinvestment, the industry has to fix oil infrastructure impacted by the Iran war. The world will have to refill their SPRs. Countries will expand their SPRs. Hormuz or no or no hormuz the supply demand picture for oil is favorable over the long term. 100% agree.

[00:13:06]This isn't a short-term investment for oil guys. It's long term and it deals with where we're at in the cycle. So this hormuz thing, it doesn't matter.

[00:13:17]And everybody's so worried like if we get a short-term sell-off because the war ends, it doesn't mean that we're going to get a sustainfully lower price in oil. I think we're going to sustainfully go higher, not lower.

[00:13:34]This would be logical level for SLV to stop underperforming. and he's got this resistance level potentially there even though it's like one point and then he's got that turning around almost. Uh we can look at SLV divided by S&P.

[00:13:52]Uh let me see what this looks like.

[00:13:55]Yeah, I I don't know. I mean it looks good. So this is your falling wedge. Just like oil, there's your falling wedge. You throw kind of a resistance line through here.

[00:14:08]that we're trying to break out of. And then you've got these this kind of triple bottom going on here. Uh so I I I don't know. I I don't really care about the short short term. Uh I look at things from a long-term perspective and and I just I mean I I I go through these daily updates and a lot of people I mean this is a pretty shortterm chart here. All he's looking at is this shortterm chart there. Um I look at the long term like this. I'm like, "Yeah, this is a big B big base or bottom and we'll break out of it and we'll we'll we'll we'll head higher at some point." And I just I don't know. I I'm comfortable with that.

[00:14:47]Like I don't need short-term like I'll put it this way. I know that people can't predict the short term. There's no there's no reason to predict it. So are you buying cheap assets or not? Yes, you're buying cheap assets. The cheap assets, if you're buying it down here for silver, then just buy them and just shut up and don't do anything. It's that simple. It's really not that hard. And this chart here, it's more or less the JX S&P TSX Venture. It's the same chart.

[00:15:16]And we'll break out eventually.

[00:15:18]And everybody wants this. It's like they get frustrated if something doesn't happen. You do realize you have no control over anything, right? You have no control. So, you can either shut up and just wait or you can sell and do whatever the heck you want and lose money somewhere else. That's fine. But if you're gonna if you're going to play these markets, you can't sit there and like try to force the market into your time frame, into your thinking. This isn't a an app that's developed to get dopamine hits from you. It doesn't work like that. That's not the way investing is. Investing, what you'll come to realize, is a lot slower moving than what most people think.

[00:16:06]It's not that fast. So, you're you're not going to get rich fast overnight if you're trying to buy undervalued assets in a poor market condition. And then switching from a poor market condition to a great market condition for that asset doesn't happen measured in days or weeks. Generally, it takes many months, maybe even a few years to get moving with some good momentum.

[00:16:32]And I just look at people, it's like it's not how the market works. It's like they're trying to force the market into something that it is not just because they want it to be.

[00:16:45]I Heat the opportunity in oil stocks isn't about the straight of her moves.

[00:16:50]It's about a steepening global decline curve. We can only estimate due to undisclosed fieldle details coming from ancient Middle Eastern giant fields.

[00:17:02]Well, yeah, it's a long-term bull market with production that's going to peak at some point between 2018, which I think it's already peaked in 2018 for conventional oil, and 2030, which then will eventually peak in unconventional and conventional oil. So that's the whole thing.

[00:17:24]We've already peaked in oil. Uh it's going to be in liquids production between now and 2030.

[00:17:32]And liquids includes natural gas liquids. So it's coming and I don't think we're going to turn this thing around. I think it's geologically constrained. Now, could we have production that goes up a little bit for a period of time if prices really ramp up and we put a whole bunch of rigs?

[00:17:49]Maybe. That very well could happen. But I don't think it'll be sustaining for the next 10 years.

[00:17:57]So I kind of look at this long-term cycle in oil like, you know, this this could go up the rest of my life. It doesn't mean that it goes straight up.

[00:18:07]You know, you have to listen to the words that I'm that's coming out of my mouth. If I say it could go up for the rest of my life, that doesn't mean it goes straight up.

[00:18:17]It doesn't mean that we won't have recessions and that we'll cycle with higher highs and higher lows. You know, don't put thoughts around the words that I'm saying. I'm just saying that we will cycle. We'll be in an uptrend cycle upcycle maybe for the rest of my life if it is ge geologically constrained.

[00:18:41]Steve Burns says, "We love owning common stocks if they can be purchased at attractive prices. Unless, however, we see a very high probability of at least 10% pre-tax returns, we will sit on the sidelines." So basically, they just they just wait for the opportunity to come.

[00:18:59]They wait for the price to get cheap enough and then when their return on investment gets high enough from the cheap prices, they buy. That simple.

[00:19:10]It it is really that simple, guys. The problem with everybody is they're gamblers. They're all freaking gamblers.

[00:19:16]So, they look at the short term. They want to gamble. They want the field.

[00:19:19]They want the dopamine hit.

[00:19:22]And the investors are like, "There's nothing here that you're not going to get any dopamine hits for a while." And they like can't handle that. It's like they'd rather lose and get the loss feeling and and then have the potential hope for gains because that's a gambler mindset. The investors just sit around, wait for opportunities, they swing the bat when the opportunity comes and that's it. That's all they do. And then they just sit back to do nothing again.

[00:19:51]Investing is a bunch of doing nothing.

[00:19:53]It's waiting for the opportunity to develop, taking your swing when it comes, and then waiting for that to mature with time.

[00:20:05]Uh, Warren Buffett says, "All these economists with 160 IQ's and spending their life studying it, and can you name me one superw wealthy economist who's ever earned money out of securities?"

[00:20:18]No.

[00:20:20]No. And I think I talked about that last uh video, so we'll end it there. Give me a thumb up for the content, guys.

[00:20:26]Subscribe to the channel. Subscribe to the website if you'd like. Uh special and 500 year of the coupon codes. And that's all I've got for today. So, we'll catch you next time, guys. See you.