Rare Earth Miners Benefit From Pentagon Catalysts
"They are on a front foot let me tell you. USA Rare Earths up 22%, Critical Metals up 21% and MP Materials up 11%. Now, this is on the back of the FT reporting that the Pentagon has stepped up stockpiling of critical minerals, procuring up to $1 billion worth to counter China’s dominance and rare earths that are essential to defense. It follows the export restrictions imposed on many of the materials by China last week."
The speaker emphasizes the robust performance of rare earth-related stocks driven by significant Pentagon stockpiling and current export restrictions from China. This commentary implies a strong structural catalyst for these companies, pointing to a positive outlook in the near term.
Trim Profits and Hedge Precious Metals Exposure (GDX & Silver)
"We rebalanced to our model weight of 10% and took chips off the table by hedging half of our precious metals position with a covered call out to November. If you are overweight, say more than 15-20% in metals, consider selling some into this ramp while the sentiment remains extremely rich."
The panel discusses the recent run in precious metals and gold mining stocks, notably GDX, which has advanced significantly from its base. They suggest that investors who are overweight in these assets should trim some profits by hedging via strategies such as selling covered calls. The commentary points to technical indicators (e.g., GDX trading below the 21-day moving average) and set targets (potential to reach levels around 100 for GDX and an all-time high near 50 for silver), which makes this an actionable tactical move for managing profit and risk.
Positive Outlook for Australian Gold Producers (GDX ETF)
"Now, turning to individual gold stocks, the GDX ETF listed on the Australian market was slightly lower, but it was such a good night on Friday night that I think we should see a pretty positive session tomorrow for Australian gold producers."
The speaker comments on the performance of the GDX ETF, noting that despite a minor pullback, strong activity on the previous session suggests a potential rebound in Australian gold producers. This serves as actionable investor color for those interested in precious metals exposure.
Hedge Extended Exposure in Gold Mining ETF (GDX)
"We have half of it written with short covered calls on GDX to bring in income because we know at some point we're going to have a pullback. GDX went from 52 to 65 in just a few weeks, and now it is trading well above its 21-day and 50-day moving averages."
GDX, a gold mining ETF, has experienced rapid gains from 52 to 65 over a few weeks. Due to its extended condition above key moving averages, the recommendation is to hedge the position by writing short covered calls. This approach is intended to secure income and mitigate downside risk in a potentially volatile market environment.