Is the Copper hype justified?

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What to expect (May 2)

• 🌌 Are we entering into a new Copper era?

• ✅ Monster Pick - Gold in Côte d'Ivoire?

Copper is finally having it’s day.

The metal is trading at over $5/pound and shows no signs of slowing down.

We’ve been hearing about the need for copper for the past few years, and it we’ve reached a turning point.

With any large increase in value, investors have to be careful about buying at all-time highs.

Companies like Nvidia, trading at 26x revenue, are potentially overvalued and more likely that they go down in value rather than up, hypothetically of course.

Is the current copper boom indicative of a bubble, or is this the start of something huge?

I’d lean towards agreeing with the latter.

The Surge in Copper Prices

Copper prices have surged by 25% this year alone, reaching a new all-time high of $5.19 a pound.

We’re seeing demand increase in areas like electric vehicles, renewable energy, and data centers - some of the most hyped & high-growth industries.

When adjusted for inflation, copper prices are at levels last seen in the early 1990s - which means there’s still room to grow.

What is driving this demand?

Green Tech: Copper is needed for renewable energy projects, there’s no way around it.

For instance, solar projects need about 2x as much copper per megawatt compared to traditional power sources, while offshore wind projects use up to 5x more copper.

Electric Vehicles: The shift towards EV’s obviously increases copper demand. EVs use 2.5x more copper than regular vehicles for their batteries, motors, and charging infrastructure. While the shift towards EV’s may be delayed, the demand isn’t going anywhere.

Data Centers and AI: Tech infrastructure which includes data centers and AI systems, heavily relies on copper. With companies like OpenAI and Google driving the growth of AI, the need for copper is clear.

Supply Constraints

One of the primary constraints on copper supply is the limited number of new greenfield projects.

Industry expert Lukas Lundin has highlighted this issue, noting the scarcity of new copper mining project.

This lack of development means that existing mines are under pressure to meet rising demand and major copper producers are scrambling to acquire more projects

This all bodes well for copper exploration companies.

Nations are trying control over copper resources to secure their energy transition and tech advancements.

The Biden administration is reportedly in talks to invest $3 billion in Zambia's First Quantum Minerals to secure a stake in its copper mines.

Expert Insights

Jeff Currie, chief strategy officer at the Carlyle Group, called copper "the most compelling trade" he’s ever seen. Currie said the energy demand for AI and the constraints on the electricity grid, create a enticing market for the metal​​.

Robert Friedland, Founder and Chairman of Ivanhoe Mines has famously stated, "You're going to need a telescope to see copper prices".

Stanley Druckenmiller, a legendary investor, paints a clear picture: "Copper is a pretty simple story, takes about 12 years, greenfield to produce copper, and you got EVs, the grid, data centers, and believe it or not munitions. These missiles all got enough copper in them and the world's getting hot, that we just think the supply-demand situation is incredible for the next five or six years"​.

How to take advantage

The easiest way to make a bet on copper is by investing in it, but you don’t need to fill your garage with copper wire.

Copper exploration companies have the real upside here.

With limited greenfield projects, large mining companies are scooping up projects that have any sign of potential - and they’re going to have to do it at a record pace if the world is going to catch up with the demand.

The industry has been touting copper as an investment for years, but it finally looks like everything is coming to fruition.

We’re about to see a boom in copper like never before.

👋 Colton, Stock Monster.

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