In many parts of the world, vendors sell things on the roadside. Pulling up at a red light, you can lean out your window to buy gum, phone chargers, even brooms.
But there was one item I’d never seen before, the first time I went to the Southeast Asian nation of Myanmar.
Driving from the airport into downtown, we stopped at a red light. When I looked up, there was a young man outside holding up printed booklets.
Squinting, I could see the title: “Foreign Investment Law.” The enterprising fellow was selling copies of the newly enacted legislation.
It was probably a good gig…
Back then in 2010, investors were flooding into Myanmar. The place was seen as a gold mine. It had been closed off to the world for half a century. It boasted a large population and abundant resources.
Myanmar’s isolation ended that year for political reasons. The country’s military dictatorship backed off control. I think the generals were sick of being sanctioned and not able to travel to London or Vegas to spend their billions.
They allowed quasi-democratic elections. Those swept former dissident leader Aung San Suu Kyi into power. The world assumed she would throw the doors open to foreign investment. Everyone came to capitalize – including the roadside vendors.
A Critical Shift… For Better or Worse
Political change is a huge driver for natural resource investment. Many countries have obvious mineral wealth, but they’re closed to investment and development by corruption, obstruction, or all-out war.
When politics shift in those places, it creates big opportunities.
Peru in the early 1990s, for example. As the country emerged from decades of civil war, mining companies finally explored the once-dangerous mountains. They hit massive finds of gold and copper.
Sometimes it’s a policy shift.
In the 1990s, the U.S. lowered taxes on oil and gas production in the Gulf of Mexico. At the time, the Gulf was a sleepy, forgotten basin. Within a few years it became a major hub for drilling and profits.
This month, we’re seeing the rise of political opportunities. For better or for worse, government change could be coming in America as Joe Biden unseats President Trump.
This presidential shift comes at a critical time for resources.
Some businesses like oil and gas are struggling. Others like critical metals surged under Trump. The coal business is nearly dead in America. Gold mining is going strong as prices rise.
For the most part, these trends will continue.
There’s one spot, however, where I believe Biden would have a huge impact. It’s a sector that’s already surging – and it might get absolutely massive in the coming months.
A Mining Sector Both Parties Can Love
The emerging Biden presidency already had a few big effects in resources. Energy stocks plunged late in election week – although they bounced strongly the week after.
Gold surged $50 per ounce in the days after the election. Although that also reversed the following week.
But one commodities sector absolutely roared on news of Biden’s apparent win.
Lithium stocks, for example, caught fire late in election week.
One major U.S. lithium miner soared nearly 30% in three trading days. The CEO said he thinks Biden is better than Trump for critical metals. “The market side of it would be more favorable with Biden,” he told Bloomberg in an interview during election week.
That’s because Biden plans to spend $2 trillion on clean energy in America.
The Democrats will likely print trillions. And a big chunk of that will go to critical metals in electric vehicles, solar panels, and other energy sectors.
Biden said so himself.
Late in October, Reuters broke the story that he’s getting behind critical metals mining. Three different sources confirmed closed-door meetings between Biden and mining companies. He reportedly pledged his full support for critical metals.
“A Biden administration would emphasize green energy, and in order to get more solar panels, you need more raw materials,” said one source.
Two additional sources said Biden agrees with the Trump administration’s policies to support domestic mining.
The Biggest Winner
It will take time to see exactly how this plays out. But it likely means policy support for mining – and perhaps direct financial aid, like we’ve seen recently in the rare earths sector.
Reuters’ sources, in fact, noted rare earths as a metal Biden is pushing. They also mentioned several others, including lithium, copper, and nickel.
I believe nickel could be the biggest winner from these. And it could happen quickly.
For one thing, high-profile tech firms like Tesla are scouring for nickel supply. As I discussed earlier this month, rumors are swirling about Tesla funding nickel mines in North America.
Tesla already showed it’s serious about mining. In September it put cash on the table, doing a deal with a North Carolina lithium mine. That sent mining stocks soaring.
Elon Musk has been even more vocal about nickel. The metal is key to Tesla’s battery plans.
And with a Biden government behind it, nickel in North America may be about to explode into the headlines.
To gain exposure, consider investing in nickel miners. They are at the bottom of the supply chain, and will directly benefit from higher nickel prices.
Norilsk Nickel (NILSY) is the largest nickel miner in the world. It should get a solid lift once the underlying metal starts rising.
But make sure to position size appropriately here. The company operates in Russia, and while it’s a relatively stable jurisdiction for local companies, there’s still some risk.
Keep walking the path,
Editor, Strategic Investor