Did You Miss Out On Copper?

Copper has made quite a run this year.

 

And copper is an absolute must for any contrarian investor’s portfolio.

 

So……..

 

I was asked before what I think the best investment for the next 2, 5, and 10 years will be (this was about a year ago).

 

I answered this question on the podcast, and my answers were…

 

2 yrs – Bitcoin

5 yrs – Silver

10 yrs – Copper

 

So far so good.

 

Allow me to explain my copper prediction a bit further.

 

Starting with the obvious, future supply is a big problem (current supply is not).  I will not go into the disastrous mining situation as it pertains to supply here, I’ve already gone into it several times.  Just know it’s really bad, and irreversible, at least for the next 20 years ahead and probably longer.

 

Demand-wise, things are steady now, but the world has big plans for electrification.  And no, this did not die along with the joyful death of the ESG movement.  This is a very practical response to what will be higher energy costs going forward.

 

Also, more and more places on Planet Earth will who never had electricity will be getting it. The entire world will need to electrify a lot more that it currently is.

 

And you can’t do that without lots and lots of copper (and silver to a degree, but again that’s another topic).

 

We will have a recession soon, but the recovery thereafter is going to involve copious amounts of copper that we are not going to be able to supply.

 

China understands all of this.  They buy a lot of copper when it’s cheap, and then they horde it.  They’ve recently bought more.

 

“But prices aren’t cheap anymore!”

 

 

Actually, from a historical perspective, it may in fact be quite “cheap” once we look back on it.

 

But that’s not the reason for this blog post.

 

I still think the price of copper is going down.

 

Copper is unique unto itself, but still (somewhat rightfully so) gets thrown into the industrial metals category.

 

Meaning, if we’re building, we’re going to need it.  If we’re not building, then we’re going to need it a lot less.

 

Think metals like iron ore, zinc, steel, etc.

 

A good short-term barometer of “are we building shit right now or not”, for me, has always been lumber prices.

 

 

Not great.

 

And if you’re like me and you think a long recession is coming soon, almost nobody is going to be building anything, except maybe a bunker.

 

So if you have no exposure to copper at this point, shame on you.

 

But I think you’re still going to have time.

 

I do not think this move up in price has been rightfully justified.

 

Conclusion

 

I can only speak for myself here.

 

I currently have about half of the copper exposure I’m hoping to have moving forward.

 

I’m saving the rest for lower prices, which I think we’ll get.

 

But I absolutely do NOT want to get left behind on this one.

 

And I doubt you do either.

 

This is a generational play.

 

–VP