Global Copper Boom Or Bust
We have read numerous stories and analyst reports about how there is a growing copper shortage that will result in soaring prices. I don’t buy it. Much of it is predicated on the belief that electric vehicles and the upgrading of electricity grids will drive the shortage. While the case for building out the electricity grid has merit it will probably be over a long period of time. The case for going to mostly electric vehicles by the prescribed timeframe in many jurisdictions is unlikely. The coming global economic slowdown is going to push demand out for a number of years. Technological developments in alternative fuel vehicles will also likely slow down the timeframe and demand for copper. As the cost of vehicles continue to rise, the economy slows, the demand for all vehicles will slow for a few years at least. If the costs become prohibitive a move to greater ridesharing and transportation as a service could lead to less vehicle ownership over time. Cars aren’t going away and copper will still be needed, just not in the quantities and timeframes outlined in the most bullish scenarios.
>> growing copper shortage that will result in soaring prices. I don’t buy it. Much of it is predicated on the belief that electric vehicles and the upgrading of electricity grids will drive the shortage.
Nope, wrong starting point. It is not about EV’s at all. it is about two things:
1 – there have been a few decades of under-investements into this sector. Most mines are old, and toward end of their lives. Some are pushing 75+ years. There was no price incentive to explore for new deposits and to build new mines for a very long time, decades! Long term, there is just not enough copper available at current production. And it takes time to get supply/demand in balance.
2 – couple, maybe 3-4 days ago, I posted here link to the video, saying, if you watch one video this year, should be this one! You get explanation of tectonic shifts, that are happening right now and wall street (and of course majority market participants) are not aware off. With some fascinating numbers, data… Bottom line is, emerging markets (excluding China) are walking up and starting to drive demand. It is huge. Ignore at your own peril. You are getting fundamentals on copper wrong.
This is meant long term. Short term I have no clue and I’m not buying here copper. I want to see first some strong market correction. Crash is even better lol. Looks like we are approaching some financial crisis (Canadian banks for starter) which can be a start of something bigger. Who knows, whatever it is and whenever it is, I have no clue, but when we do get some crisis, I will be loading on copper for long term. Energy, and copper for long term. I already am in energy though.
The whole theme of my post is that copper is not going substanially higher in the next year or two. I don’t disagree about the long term fundamentals but those dynamics have been in place for years. Eventually, things will turn favorable, just not before the current global slowdown runs it’s course.
Yeah, next year or two will only be good, to enter undervalued assets one with to have 🙂
>> just not before the current global slowdown runs it’s course
But do watch that video. You for example are talking about “current global slowdown”. After watching that video, you may see world little bit different. Like, slowdown of DM but rise of EM. There is interesting information, check it out, process, think about it and then make your decision.
I will re-post the link, if I run into it. I didn’t save it, since I watched it a coupe times, made some notes and I didn’t need it any more. But in my opinion it is one, everyone being in financial markets should watch it. IMHO.
Typo:
Yeah, next year or two will only be good, to enter undervalued assets one WISH to have
Buck – excellent comments. I missed that video. Do you recall the name/title? author? I’d do a search for it but need the name… Thanks!!
Found it, here it is:
https://www.youtube.com/watch?v=ZnSsXgmZAls
Information you will hear is not their opinion, but based on data and research. I’m taking seriously these two.
Which does not mean, you want to load on energy and commodities at this point. What you need to do is:
1 – think things through
2 – if you agree, wait on deep enough general markets correction and then start loading up