Every year, a different group of stocks enters a big trend and produces the biggest gains in the stock market...
One year, the big trend is in real estate stocks. The next year it's energy stocks... the next it's biotech companies.
But what if you knew which group of stocks would jump on next year’s biggest trend? If you did, you could make a lot of money.
Today, I’m going to tell you that group.
The last time we saw a significant rise in this group of stocks (early ‘03 to early ‘04), one of the companies in the group I'm going to tell you about shot up an incredible 682%.
What happened to the other? It rose over 500%.
The group of stocks I'm talking about deal in a precious metal called palladium…and what could be THE biggest move in the stock market over the next six months is getting underway. It’s time to get on board.
But before we get to the stocks, let's first take a look at the metal itself...
Palladium’s primary use is in automobile catalytic converters. It’s also used in electronics, dentistry, jewelry, fuel cells, oil refinery, and a number of other industries. More important than palladium’s multiple uses, however, is its multiple substitutions…
Palladium is a member of the platinum group of metals. Consequently, wherever platinum is used, palladium may provide a reasonable alternative.
So rather than looking at the industrial uses of the metals, and analyzing the potential increase or decrease in demand, it is more important to pay attention to the price relationship between platinum and palladium.
Early in the year 2000, the price of palladium advanced sharply due in part to delivery interruptions from Russia causing a shortage:
Industry began substituting other cheaper platinum group metals for palladium. Russia began shipping again, and soon an oversupply asserted itself on the market, causing the price of palladium to collapse.
Platinum, meanwhile, moved into a bull market, no doubt spurred by industry substitution away from palladium. Take a look at the chart below and you’ll see the tremendous move I’m talking about.
Today, with platinum at $970 per ounce and palladium at $268 per ounce, the situation of 2000 has been completely reversed and now the price spread of platinum over palladium is at historic levels: As this chart of the palladium/platinum ratio shows, the market is once again in disequilibrium.
Consequently, either the price of platinum has to fall, or the price of palladium has to rise, or we’ll see some combination of the two.
By far, the best way to play this trade is to buy stock in the only two north American companies engaged in mining for palladium: Stillwater Mining Company (SWC), and North American Palladium (PAL).
We could size up these stocks based on the historical financials of the businesses. But for this trade, that stuff doesn’t matter. What seems to matter to the markets is the price of palladium. Palladium goes up a little, these stocks go up a lot.
I’ve included one more chart to show the incredible moves these stocks make when palladium prices start rising. The upside here is literally hundreds of percent.
For readers of my newsletter, The Big Trend Report, back on October 24, I recommended buying shares of Stillwater Mining (SWC) up to $10 and North American Palladium (PAL) up to $6 per share. Both stocks are already up over $3 since I recommended them (pretty big gains, considering PAL was under $5 a share at the time).
Readers of The Big Trend Report are sitting pretty so far. Since I told my readers “I expect we'll see the shares of both of these companies appreciate by more than 100%,” there are still plenty more gains to come. And the next big trend is always around the corner…
Good investing,
Jeff Clark
Editor's note: Jeff Clark is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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