There wasn’t going to be enough copper before AI. The expected demands for copper from the electrification of future demands was going to overwhelm the supply of copper even before the AI revolution kicked off when Chatgpt mainstreamed.
Now the demand for copper is going to a whole new level.
…and the market doesn’t seem to have woken up to it, not if you look at the Copper chart.
Its ironic that the price slumped because the tariffs on copper were rolled back. It was rowed back because the US needs Copper desperately and like the waiving of Russian sanctions on Platinum group metals, the reason for this action is because in the new reality when metals are strategic they are too key to be impeded.
The price slumping because there is not enough Copper to play games with its price, is counterintuitive to say the least.
The long term investment thought though is simple, these is not enough copper to match a big untick in demand and its price will therefore rise.
The options to invest in copper however are not so easy. You don’t want to be buying tonnes of physicals and futures contract is always a fraught environment.
There are the ETF.
United States Copper Index Fund (CPER) tracking copper futures traded on COMEX.
iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC) giving direct futures exposure.
The Copper miners ETF are:
Global X Copper Miners ETF (COPX) – holding basket of copper miners, from Freeport-McMoRan, Southern Copper, Lundin Mining etc.
iShares MSCI Global Metals & Mining Producers ETF (PICK) – broad mining exposure with significant copper holdings.
SPDR S&P Metals & Mining ETF (XME) diversified U.S. mining stocks, with copper-heavy exposure.
So that’s does feel like a very broad range to choose from and if you want to go blue chip mining again there is hardly a plethora of choices.
To narrow in on big producers that are pure play one ends up in difficulty once you select Antofagasta and FreeportMcMoran (I hold these.) Yes there are plenty of others with Copper and of course there are plenty of secondary and exploration plays to dice with, but dull, big, pure copper plays, not so much.
Which brings us to Anglo American, which by the time you read this I will likely also own. They are merging with Teck in Canada to create a copper juggernault. It’s a $50bn dollar deal. For me this is a message from those boards to get long Copper because if its worth combining $50bn worth of companies to go hell for leather for Copper, why wouldn’t you tag along with the ultimate insiders?
So the key to the future is, there will be infinite demand for energy because there will be infinite demand for AI which needs it. AI because of its voracious energy needs for transmission and for cooling, also needs huge amounts of Copper. Now this is of course a bold claim, but not as bold as Elon Musk’s claim that AI will take all the energy of our sun in due course and then all the energy of the galaxy.
You can see him say this last week on my Youtube channel on the subject.
https://www.youtube.com/watch?v=zZfRnAMIIIw&t=16s
So when the fellow with the most AI on earth says this, who is the worlds richest man that lands rockets backwards from space on floating drone barges in the ocean, you might tone down his opinion but you can see even if he is 1% right, humanity is going to need a lot of Copper. You are a brave person indeed if you think Musk might not have a point and when you take it even a little into account you see why we are in a new dynamic. The world is shifting from intrinsically tactical to fundamentally strategic and this makes for a wole new set of realities most of which are oozing in opportunity.
For example, Copper not only doesn’t grow on trees and mines take a long time to come on stream. Menwhile silicon valley and the governments are planning to cover the globe in server centres and boil the oceans.