Copper Bull Market Just Beginning
Long Only, Gold & Precious Metals, Oil & Gas, Contrarian
Seeking Alpha Analyst Since 2014
With over a decade of experience in the investment industry, I am a highly skilled private investor with a proven track record of success in the commodities and hard assets sector. My areas of expertise include investing in gold and silver miners, royalty and streaming companies, pure exploration companies, as well as oil and gas producers and MLPs. My comprehensive understanding of these markets and my ability to identify and capitalize on profitable opportunities have enabled me to consistently deliver strong returns for my subscribers.
Summary
- Copper has a bright future due to a supply-demand imbalance and growing push to electric vehicles and green energy.
- EVs use up to three-times as much copper than traditional gas vehicles, and use much more as the size of the vehicle increases.
- I discuss the bright future of copper and list my three favorite copper stocks for 2021.
Copper Bull Market Just Beginning (3 Top Stocks For 2021)
[The following coverage was released to my subscribers last week.]
Dear followers,
While silver and gold remain my favorite commodities to profit from the ongoing devaluation of the U.S. dollar and the inevitable inflation tidal wave we're about to experience, I believe copper is also well-deserving of a spot in your portfolio. I have released my top 3 copper stock picks for 2021.
Copper prices trade at $3.56/lb as of writing, while copper has had an amazing run since the start of 2020, I believe it'll likely eclipse its all-time high of $4.58/lb in 2011, within a few years time, as supply will not be able to keep up with demand.
While some gold miners actually have good exposure to copper - Barrick Gold (GOLD), in particular, which owns four producing copper mines - I do think it's a good idea to have some copper-only stocks in the portfolio to profit from the ongoing copper bull market.
We won't see the percentage gains we'll likely see from gold and silver since copper has already broken out in a big way, but copper has a bright future.
Why copper, and why now?
(Credit: Women Auto Know, a certified auto mechanic and shop owner.)
Copper has a very bright future because the metal is used heavily in the making of vehicles - there's more than 50 pounds of copper in a typical U.S.-built automobile (40 pounds for electrical and about 10 pounds for nonelectrical components), according to Copper.org.
The U.S. is making a hard push to EVs and phasing out "fossil-fuel" vehicles. In EVs, copper is used in the making of batteries, motors and charging equipment.
Joe Biden (who takes office soon) released his climate plan, which says the following:
There are now one million electric vehicles on the road in the United States. But a key barrier to further deployment of these greenhouse-gas reducing vehicles is the lack of charging stations and coordination across all levels of government.
As President, Biden will work with our nation’s governors and mayors to support the deployment of more than 500,000 new public charging outlets by the end of 2030. In addition, Biden will restore the full electric vehicle tax credit to incentivize the purchase of these vehicles.
Why does this matter for copper?
Because EVs can use up three-times more copper than traditional gas vehicles (according to Wood Mackenzie,and there's no viable alternative to copper.)
"The amount goes up as the size of the vehicle increases: a fully electric bus uses between 11 and 16 times more copper than an ICE passenger vehicle, depending on the size of the battery and the actual bus."
There is going to be a big struggle to keep up with the growing copper demand (the images below drive this point home.) Wood Mackenzie has also estimated that the EV sector will need 250% more copper by the year 2030 just for charging stations (500K new ones planned in the U.S. alone by 2030!)
A deficit in the copper market is likely to deepen over the next several years, according to SP Global, and Fitch Solutions has predicted a copper shortfall of 489,000 tonnes in 2024, rising to 510,000 tonnes in 2027, which will boost prices higher.
Goldman analysts raised their 12-month forecast for copper to $9,500 per metric ton, up from a previous estimate of $7,500, and the bank thinks prices may eclipse all-time highs by 2022.
The other part of this equation is the lack of new copper supply. There just hasn't been enough exploration and development of copper assets in the past few years because for a while, prices traded between $2 - $3/lb. The world needs new copper discoveries so it can get supply to at least come close to the growing demand.
Copper mines can be enormously expensive to build, also contributing to the supply issue. It's not uncommon for upfront capex to run in the multi-billions for a large operation.
Large miners like Freeport McMoran (FCX) have already had a great run-up and I don't believe that stock is the best way to gain exposure to copper prices given the already huge run-up in its stock price (I'm actually looking to possibly sell my position soon). There are a few juniors in particular that I think have multi-bagger potential (200%+ upside potential) and they haven't made a big move up yet.
Top copper stocks for 2021
My top copper stock picks have been released to subscribers of my marketplace service. You have to sign up to view check out my top 3 copper stock picks - as well as my top gold and top silver stock picks for 2021 (I believe silver will outperform gold in 2021.)
I also provide access my entire portfolio holdings (40+ stocks) with buy and sell updates in real-time, a new "ultimate list of silver stocks" with 50+ companies including ratings, as well as access to my gold miner rating spreadsheet with ratings on more than 200 gold and silver equities. Also check out our live chat where you can discuss the market with like-minded investors.
Please note: I'm still offering a free 2-week trial, as well as a 10% discount on the service - an annual pass now only costs $33.68 per month. I only plan on keeping this offer alive until the end of the month!
Thank you for your support! I appreciate you,
Steve "Gold Mining Bull"
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