Mining for Money: And the Winner of the First Quarter is …

Silver. Yep, that lustrous metal kicked the collective butts of all other major asset classes in the first quarter. Silver rallied 13.5% in Q1. Then it dropped the microphone and walked off the stage.

Just kidding. Silver will be back. I believe we’re looking at a heck of a year.

Emerging markets, as tracked by the iShares MSCI Emerging Markets (NYSE: EEM) came in a close second, up 12.3%.

Some other early leaders, though, faded like acid-washed jeans.

For example, banks, as tracked by the SPDR S&P 500 Bank ETF (NYSE: KBE), roared out of the gate after the presidential election. But banks hit a wall in the New Year. Banks are actually down 1% for the year, as measured by the KBE.

Oil? Nah. Down 6%. I’m not even going to put it on the chart. Small-caps? Just a 2.61% gain. Sad. Big brother S&P 500 (Total Return Index) left the small-caps in the dust with a 6.1% gain.

But tech nearly caught up with the emerging markets. The QQQ was up 11.8% for the quarter.

But how about gold? A gain of 8.1%. Not nearly as much as you might think.

Frankly, gold hasn’t impressed me this year … yet. Heck, healthcare, as tracked by the Health Care Select Sector SPDR (NYSE: XLV), managed an 7.8% gain, despite being whipsawed by the Obamacare replacement fiasco in Washington, D.C.

But there’s something brewing that tells me that gold’s best days are yet to come. More on that in a bit. First, a chart of the winners.

On this chart, I’ve put the S&P 500 (the black line) and the other asset classes outperforming it.

But the big question is, what will outperform going forward?

Well, I have one chart to answer that. Have you seen what’s happening with inflation?

In fact, headline inflation, as measured by PCE index that the Fed favors, is now above the Fed’s 2% target. That’s the first time that has happened since 2012.

The so-called core rate of inflation that strips out food and energy, meanwhile, rose 0.2% in February. The core rate has climbed 1.8% in the past 12 months. Still pretty hot. As if you can live without food and energy.

So if you’re putting together your bets for the rest of the year, you might want to pick something that can do well in inflation.

Some ideas: Real estate … energy … GOLD!

And silver, too. I’ve told you how silver acts like gold on steroids. Or maybe gold without its meds. When gold is rising, silver soars. When gold slumps, silver falls into the pit of despair.

Hey, did you know we’ve hit peak production for both metals? I told you in a previous article how the world has hit Peak Silver. Now, the fine folks at GFMS Thompson Reuters just dropped a bombshell. The world hit Peak Gold, too!

BOOM-shakalaka!

When supply of something shrinks, what usually happens to prices? Hmm …

Now add in inflation, and gold’s role as a historic hedge against it.

Bottom line: Things are looking good for both metals. And the miners that produce them. You’ll want other things that do well in inflationary times, too.

And it’s not just the U.S. that is seeing more inflation. Inflation is heating up all over the world.

For a long time, investors thought the Inflation Beast was dead. Nope. The Beast is back. Be ready for it.

P.S. I’m putting the finishing touch on a virtual goldmine of my favorite microcap stocks in the metals and mining space. And I’m planning to unveil these to our very best subscribers in the coming weeks. If you’d like me to notify you about not only what to buy … but also precisely when … just let me know by clicking this link here.

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Sean travels far and wide to seek out small-cap values in the natural resource sector. His journey started in New England. As a youth he worked on Mt. Washington, on the cog railroad that runs to the summit.