AJB Capital

Natural Resource Partners (NRP) is up over 10% in a week.

Here's why.

One ounce of gold buys 85 short tons of coal right now.

Historically, that number's been 30-40 tons on average. Sometimes it stretches to 50 or 60 in extreme moves, but it always snaps back.

Right now? 85 tons. We're 75% above the historical trend.
Coal has completely disconnected from where it should be relative to gold. Multi-decade lows while gold screams higher.
You can practically buy a full railcar of coal with a single ounce of gold right now.

This disconnect doesn't last. Either metals are wrong, or coal is massively mispriced.

NRP doesn't mine coal. They own 20,000 square miles of land and mineral rights. They collect royalty checks. No labor costs, no equipment, no diesel, no margin compression.

NRP benefits from activity without the cost pressure miners face.

Coal's treated like it's dead. Market's starting to figure it out.

Solid, quiet support right now - coming out of the overbought that we hadn't seen on the S&P 500 since October 27. So, still some caution...

It's not an issue with valuations that are the problem. It's any hiccups in liquidity that are directly tied to Treasury Auctions and Fed repo activity.

Eventually these valuations will compress... but that seems to be something well into summer... For now, start looking at the consumer defensives and the commodity producers that you want to own. We're moving into a speculative phase in these markets.