A couple articles back, I laid out the "still bullish" case on silver, and one of them being that demand has outstripped supply for 3 years now. But it isn't just silver that's been in a deficit.
AI has a lot of people buzzing, with the "darling" high fliers like NVDA and AMD making these new high powered chips. But lost in the shuffle is one quite interesting fact. All these computers for AI need copper. Every single one of them and guess what? Copper is in supply/demand deficit.
SANTIAGO, April 12 (Reuters) - Copper's bull run should continue for at least the next three years, fueled by global supply challenges and hot demand for the metal to power energy transition and artificial intelligence technologies, industry analysts say.
The outlook is an optimistic harbinger for Freeport-McMoRan and other producers as decarbonization and technological shifts fuel copper's latest demand wave after China's rise powered a similar one two decades ago.
But with question marks hanging over a number of key projects, some estimate production will struggle to meet that demand.
These themes are expected to dominate conversations in the Chilean capital of Santiago at the CRU World Copper Conference from April 15-17, the largest annual gathering of industry executives, investors and analysts. Chile is the world's biggest copper producer but its output has faltered in recent years.
But with question marks hanging over a number of key projects, some estimate production will struggle to meet that demand.
A couple articles back, I laid out the "still bullish" case on silver, and one of them being that demand has outstripped supply for 3 years now. But it isn't just silver that's been in a deficit.
AI has a lot of people buzzing, with the "darling" high fliers like NVDA and AMD making these new high powered chips. But lost in the shuffle is one quite interesting fact. All these computers for AI need copper. Every single one of them and guess what? Copper is in supply/demand deficit.
SANTIAGO, April 12 (Reuters) - Copper's bull run should continue for at least the next three years, fueled by global supply challenges and hot demand for the metal to power energy transition and artificial intelligence technologies, industry analysts say.
The outlook is an optimistic harbinger for Freeport-McMoRan and other producers as decarbonization and technological shifts fuel copper's latest demand wave after China's rise powered a similar one two decades ago.
But with question marks hanging over a number of key projects, some estimate production will struggle to meet that demand.
These themes are expected to dominate conversations in the Chilean capital of Santiago at the CRU World Copper Conference from April 15-17, the largest annual gathering of industry executives, investors and analysts. Chile is the world's biggest copper producer but its output has faltered in recent years.
But with question marks hanging over a number of key projects, some estimate production will struggle to meet that demand.
These themes are expected to dominate conversations in the Chilean capital of Santiago at the CRU World Copper Conference from April 15-17, the largest annual gathering of industry executives, investors and analysts. Chile is the world's biggest copper producer but its output has faltered in recent years.
"Copper's second secular bull market this century is taking hold," said Citi analyst Maximilian Layton, who expects demand to outstrip supply by 1 million metric tons during the next three years. "Explosive price upside is possible over the next two to three years."
In a report published earlier this week, Layton and Citi said they expect copper prices to touch $12,000 a metric ton by December 2026, a forecast echoed in a similar report from Bank of America. Prices traded near $9,378 a metric ton on Wednesday, near a 14-month high.
I'm pretty much on record suggesting that commodities are going to be where the money goes, once the market bubble pops. Yes gold, yes silver. But it will be much more, like I'm writing here about copper. Every wire in your house, your car, your appliances, your computers your 'everything" has a copper component.
So, the question is... how do we play it? In Silver, we can buy the SLV, or the various miners that produce the stuff out of the ground. We can simply buy the metal itself, in coins or bars. But how does one play in the copper sector? Well, there is an ETF of copper producers, but it trades incredibly thinly and doesn't move very well. Symbol is ICOP.
As the Reuters piece mentioned, FCX is probably one of the most notable producers. But there are others and some of them trade quite nicely. BHP would be next up on the "big" list, while SCCO comes to mind in smaller outfits. TECK comes to mind. Finally RIO has to be in the mix.
One thing that's quite different when you're looking at commodities other than gold and silver, is that you rarely if ever want to take physical delivery of it. While Gold is 2400 an ounce and we suggest that people should own it, an ounce of copper is never going to make you rich. ( not that an ounce of gold will, but you get the picture) Six ounces of gold is over 12K. For that price you get over a TON of copper. Where are you going to put it? Same with oil, wheat, etc.
The only real way to play in the commodity game is via ETF's or indeed the producers themselves if they have a publicly traded stock. Some have both, for instance if you want to play in energy, you can buy the USO or XLE, ETF. But you can also invest in XOM, VLO, OXY, SLB, etc.
So are there good ETF's for a wide range of commodity exposure? Yes there is. For instance GLTR ( pretty catchy symbol for metals!) Most metal ETFs only provide exposure to gold and silver, but abrdn’s Physical Precious Metals Basket Shares ETF—its full name—offers exposure to gold, silver, platinum and palladium bullion. Much larger exposure to the four major metals.
Back in 2020, I mentioned that I wouldn't be against anyone taking a position in DBA, an agriculture ETF. It has gone on to do very well and I expect it to continue.
Real, tangible, 3 dimensional items that we use every day are getting harder and harder to come by. We've been running electric wires for well over 100 years. Imagine the amount of copper that's come out of the ground to make all that. And, just like gold or silver, the "easy pickins" have already been done, meaning it costs more to find more. So, the idea that commodities of all types will go up, isn't just because of our failing, depreciating currency. We have to include scarcity.
I'll be writing more about this topic in the future, because I believe that at some point, it will be where the big money flows. Stay tuned.