A New Bull Market In Copper Starts Now

“You’re going to need a telescope to see copper prices in 2021”

That’s how mining magnate Robert Friedland sized up the coming copper boom.

He’s not alone either.

Goldman Sachs recently said copper is its “favorite” commodity.

Copper is already moving too.

Copper posted its best quarterly price move in over a decade.

Odds of a downturn are low. As Bloomberg recently noted, “[copper] supply worries mount.”

The Dirty Secret About Commodity Investing

Before we get to the current state of copper, and the emerging supply and demand gap, you should look back at one of the most lucrative commodity bull runs in history.

Specifically, the oil boom of the early 2000s.

Because understanding that is the key to really making the most out of any coming copper boom.

The oil boom was one of the greatest commodity bull markets ever.

Oil prices ran from less than $10 per barrel to a peak of $147.

At the height of the oil boom, we heard about “Peak Oil”, where otherwise sensible people would warn about the world running out of oil.

It all inevitably turned into a bust, as high oil prices led to major technological developments. This, in turn, brought new supplies onto the market.

But there was something within the oil boom that most investors never realized.

That is how small the oil boom actually was.

Consider this.

Back in 2001, when oil was around $10 per barrel, the world consumed 75 million barrels per day.

By 2008, global oil consumption rose to more than 85 million barrels per day.

That was a 13% growth in demand over seven years.

Yet, it was enough to fuel a 1000% rise in oil prices and send dozens of oil stocks soaring higher and faster than oil prices.

The key to know about investing; it takes years for new supplies to be brought online.

As a result, a little bit of extra demand can send prices soaring, rapidly increase the value of companies with big stores of the commodity, and exponentially increase the value of early investments.

That increased demand is coming to the copper market, while the largest copper producing mines have been in production for decades and are aging fast.

The future of copper is as bright as it has been in a long time.

But its still early in this potential long-term bull market and its time to start looking at how to best get positioned for any run-up in copper prices.

Supply & Demand Is Both Good For Copper

Commodity prices are driven by supply and demand. Everything else is just noise.

When it comes to copper, we have a near perfect foundation for a bull market – rising demand and falling supply.

First, the demand.

Copper is mainly used in electrical wires, plumbing, construction, industrial engines, and other things that make the modern world work.

Recently, however, a new, growing, and soon-to-be major source of copper consumption has arrived – electric vehicles.

The Copper Development Association says that every hybrid electric vehicle 132 pounds of copper and every fully electric vehicle contains 183 pounds and copper.

That’s a lot of copper, and, in the future, it is going to be a huge source of copper demand.

Electric vehicles aren’t the future anymore. They are here and they are growing by the millions each year.

Tesla is targeting production of 500,000 vehicles this year.

Toyota sells more than six million Prius’ per year.

Mercedes, Audi, BMW, Ford, and the rest are rolling out hybrid and fully electric vehicles over the next few years.

Each one of those electric and hybrid cars is going to need copper. A lot of copper. And it’s going to be a huge driver of copper consumption in the years ahead.

This level of surging demand alone would be enough to get started buying copper plays right now.

In this case, it’s only part of the unfolding copper situation.

Supply is the other side of the copper market.

Today, that’s not looking like it’s going to be able to keep up with current demand more than another year or so, let alone future demand.

Take a look at this chart from mining researchers and engineers at Wood Mackenzie.

It shows the copper supply/demand and massive undersupply situation in the copper market.

This is because the major sources of copper – major mines around the world – are old and in decline.

Copper Production and Primary Demand

Just look at the average grade of copper coming out of these mines.

It is low and getting lower.

All types of mines are in steady decline.

Invest in Copper

How To Invest In Copper In 2020

If there were no large, new sources of demand, the supply situation in copper could be enough to drive copper prices higher.

But the two sides together – rising supply and declining demand – the potential for copper right now is explosive.

A copper bull market is coming and, based on previous commodity bull markets, you won’t want to miss out on it.

Looking ahead, we’ll identify a few of the highest potential ways to invest in copper and see the exponential returns this kind of bull market can offer.

Staff
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