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In Brief
- Nuclear power generation is proving its worth by providing stable electricity during weather events when other sources struggle to perform.
- Extensive pipeline networks are essential for balancing supply and demand across different regions during periods of high consumption and stress.
- The shift toward reliable firm power is accelerating as data center expansion and electrification increase the power grid's fundamental value.
Winter Storm Fern has slammed into the United States, encasing 34 states in ice and forcing millions of Americans to crank up their thermostats. While meteorologists track the plunging temperatures and an incoming bomb cyclone that could bring blizzard conditions and even more snow to the United States, Wall Street is tracking a different metric: the spark spread.
As the arctic blast strains the grid from the Midwest to Texas, financial thermometers are overheating. Natural Gas futures (NG=F) have surged 5.49% this week, and wholesale electricity prices in the Pennsylvania, New Jersey, Maryland (PJM) region have spiked to levels rarely seen outside of extreme events.
For the average consumer, this means anxiety about utility bills. For the watchful investor, it signals a specific market opportunity. The storm is a real-time stress test that validates the structural value of reliable energy infrastructure. It is no longer just about the weather; it is about the reliability premium.
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The Economics of a Deep Freeze
To understand the investment case, investors must look beyond the snow and focus on the supply chain. Extreme cold creates a perfect storm for energy markets.
First, demand skyrockets as heating systems run 24/7. Second, supply tightens. Frigid temperatures cause freeze-offs, a phenomenon in which water vapor in natural gas freezes at the wellhead, blocking fuel flow.
This imbalance creates scarcity. In the PJM Interconnection, spot electricity prices have recently spiked above $600 per megawatt-hour (MWh).
In this chaotic environment, assets that provide firm power become gold mines. Firm power refers to energy sources that are available on demand, regardless of sun, wind, or temperature. The market is currently repricing these assets, acknowledging that in a volatile climate, reliability is not just a luxury but a necessity.
Energy Transfer: The Pipeline Fortress
If the grid is the body, Energy Transfer LP (NYSE: ET) is the circulatory system. Headquartered in Dallas, the company moves approximately 30% of the United States' natural gas through its vast pipeline network.
When a storm like Fern disrupts the flow of gas, the spread (the price difference) between geographic hubs widens. Energy Transfer profits by utilizing its massive storage facilities to deploy gas from areas of surplus to areas of high demand. This is often referred to as the Uri Playbook, a reference to the company’s strong performance during the historic 2021 winter storm.
However, the bull case for Energy Transfer extends beyond a single bad week of weather.
- The Insider Signal: Chairman Kelcy Warren has put his money where his mouth is. In late 2025, Warren purchased over 2 million shares of Energy Transfer. When an insider buys that much stock at market price (around $17.80), it signals a strong belief that the company is undervalued.
- Strategic Pivot: Management recently suspended the Lake Charles LNG export project. While this made headlines, it is a positive for risk-averse investors. By stepping back from a costly, regulatory-heavy export project, the company can focus its capital on high-return domestic pipelines and debt reduction.
- Income Fortress: Energy Transfer offers a distribution yield of roughly 7.5%. For investors worried about market volatility, this yield provides an income buffer, effectively paying shareholders to wait for the stock price to appreciate.
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Vistra Corp: The Hybrid Powerhouse
Vistra Corp (NYSE: VST) occupies a unique position in the market. It is a hybrid utility that operates a massive fleet of natural gas plants (which can ramp up quickly during storms) and a growing fleet of nuclear reactors.
The market is currently focused on Vistra’s recent victory in the PJM capacity auction. A capacity auction is essentially an insurance payment; grid operators pay generators just to be available, regardless of whether they produce power.
For the projected 2027/2028 delivery year, these capacity prices cleared at a record high of roughly $333 per megawatt-day. Vistra cleared about 10.5 gigawatts (GW) of capacity in this auction.
- Locked-In Revenue: This auction result guarantees billions in future revenue for Vistra. The current storm validates exactly why prices are so high: grid operators are desperate to incentivize reliability.
- Financial Strength: With a recent upgrade to Investment Grade (BBB-) by S&P Global and a $1 billion share buyback program, Vistra has the balance sheet to weather storms and return cash to shareholders simultaneously.
Constellation Energy: The Tech Essential
Constellation Energy (NASDAQ: CEG) is the premium play in the energy sector. While gas plants can struggle with fuel shortages during freeze-offs, Constellation’s nuclear fleet operates near 100% capacity. Nuclear physics does not care about the wind chill.
This weather-proof reliability is the driving force behind the company’s exploding valuation. It is the primary reason Big Tech is knocking on Constellation's door.
- The Logic: Data centers that power artificial intelligence (AI) require constant, massive amounts of electricity. They cannot risk an outage during a winter storm. Consequently, hyperscalers and other tech companies are willing to pay a premium for nuclear energy to ensure 24/7 uptime.
- Valuation Context: Constellation trades at a higher price-to-earnings (P/E) multiple than its peers, hovering near 32. However, this premium reflects its scarcity value. It is one of the few ways investors can buy into a clean reliability asset that is immune to both carbon taxes and freezing temperatures.
Beyond the Freeze: The Reliability Trade
Winter Storm Fern will eventually fade from the headlines. This winter’s ice will melt, and spot prices will normalize. However, the lesson for investors should not be forgotten. The U.S. power grid is undergoing a difficult transition, facing rising demand from AI and electrification while retiring older coal plants.
This structural tightness creates a long-term reliability trade that extends far beyond this week's weather map.
- Energy Transfer captures the value of moving the fuel.
- Vistra Corp captures the value of balancing the grid.
- Constellation Energy captures the value of powering the digital economy.
The cold snap serves as a proof-of-concept. In a world of increasing weather volatility and energy demand, the most boring assets, pipes and power plants, are becoming the most exciting growth stories.
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