By Eoin Treacy, co-editor, Market Minute

A decade ago, no one wanted to admit they worked in banking.

The credit crisis was still too fresh in everyone’s memory. A lot of people were very bitter, some still are.

Today, the same sideways glances are cast at people who work in mining. It’s even worse if you work in the coal sector.

Coal is the most unloved commodity in the world right now…

Imagine going to an investment conference and pitching a new coal idea. At best, you might be laughed out of the room… At worst, you might find yourself uninvited to future events, suddenly without friends, and shunned on social media.

That’s because coal is one of the worst polluting fuels in the world. By supporting the industry, investors are being accused of choking the planet.

It’s now impossible to raise money for new coal mines.

For example, the VanEck Vectors Coal ETF (KOL) was liquidated at the end of last year. It’s very unusual for a fund rallying strongly to be shelved. But, the optics of hosting a coal fund are simply too bad for any fund management company.

Despite public sentiment, coal is still essential to modern life. Without a new supply, the existing mines are rising in value. What’s more, the price of coal is also rising.

One of the best representations of the price of coal is the futures market on coking coal on the Dalian Commodity Exchange in China. The Chinese market is one of the only ways to trade coal anymore, since most coal companies have been taken off the U.S. market.

Take a look at this chart to get a better picture of the rising trend in coal prices…


Coal’s price has risen 36% this year alone. After all, it’s hard to picture a society without coal, since it’s so useful.

Take metallurgical coal, it’s essential in producing raw steel. Although it is possible to recycle scrap steel without using new coal, all new steel still needs coal.

And, after every major economic crisis, governments often plan new infrastructure. That means things like bridges and wind turbines will need steel in order to be built… Coal’s not going away any time soon.

So, what does this mean for investors?

Well, there’s a couple of things…

First off, Peabody Energy (BTU) – the largest private sector coal company in the world – is one of the top-10 best performing shares on the Russell 2000 Index this year. That’s bullish.

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The second, and more important, reason is that China is building a strategic reserve for coal.

That might sound funny when the media is awash with stories about how a zero-carbon world is around the corner. The reality is that China still generates most of its electricity from coal. That’s not going to change any time soon.

Limited new mine supply, increasing demand from an economic recovery, and strategic buying is a recipe for a bull market.

When I think about the best ways to play this sector, the least controversial would be to buy steel companies. Something like the VanEck Vectors Steel ETF (SLX) since they benefit from the same trends.

However, there are a small number of coal companies that are breaking out of their base formations… That suggests the bear market is over. Peabody Energy (BTU), Arch Resources (ARCH), and SunCoke Energy (SXC) are all breaking out.

And this is only the beginning…

We’re going to hear a lot more about this under the radar bull market in the coming months. Outperformance doesn’t go unnoticed for long.

All the best,

Eoin Treacy
Co-editor, Market Minute

P.S. Last Friday, I held another one of my weekly presentations where I shared some thoughts on what’s happening in the market.

And there was a lot to talk about… I discussed the big news in inflation, the rally in bond prices, and oil marching higher.

If you missed the last video, you can find it right here… And I’ll be back again on Friday with another installment of my Eoin’s Insights series.

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Are you trading any coal stocks, or are you a firm believer in the green energy sector?

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