Red Metal Riches
For many months now in frequent Wealth Watch articles I’ve highlighted the bullish case for investing in precious metals.
For the most part we’ve focused on gold and silver. But gold and silver aren’t the only metals that are glittering right now.
Commodities as an asset class, which have been much maligned in recent years, are swinging back into favor.
The Latest Bullish Upside Breakout Is in Copper
The red metal just broke out above its 200-day moving average and smashed through stiff overhead price resistance established all the way back in mid-2017.
That’s a bullish sign of a powerful uptrend for copper, which is also a positive sign for the larger global economy.
Copper has long been known by the nickname “Dr. Copper” because it’s one of the best economic indicators of all, with uptrends signaling growing strength in economic output, and therefore an uptick in copper consumption.
Sure enough, copper demand is projected to reach nearly 30 million tons per year within the next eight years, up from about 23.6 million tons last year. That’s demand growth of nearly 30% in less than a decade. And it’s easy to see why.
The EV Profit Factor
Copper is widely used in everything from household wiring to consumer products, autos and even semiconductor manufacturing. When it comes to the exploding market for electric vehicles (EVs), the red metal is really in hot demand.
In fact, there are miles of the red metal in every EV that rolls off the assembly line. EVs are wired with somewhere between three to four times the amount of copper that goes into traditional gas-powered automobiles. And China is ground zero for the EV revolution.
EV sales in China are exploding upward at a compound growth rate of 118% since 2011.
Still, EVs made up only 7% of total new vehicle sales in China last year. But in less than a decade, the country will account for nearly 40% of the entire worldwide EV market.
That’s a big demand boost for copper.
And while gold has glittered, grabbing investors’ attention with a 13% rise in price over the past six months, copper has been relatively quiet.
Copper prices are only up about 6% so far this year. That’s still nearly 70% off the 2011 high price.
There’s plenty of upside potential here, and now there’s a catalyst.
Recently, analysts have been upping their price targets for the red metal on fears of growing supply-demand imbalances as more copper gets gobbled up worldwide.
In fact, analysts expect copper supply to be in a deficit each and every year for at least the next four years, as you can see above.
By 2022, copper could be in the biggest supply deficit since 2004, and back then, copper prices exploded 265% higher in just 18 months!
History looks set to repeat as increased demand for copper far outstrips new supplies.
An easy way to play this trend is with an ETF that tracks physical copper prices, such as the United States Copper Index Fund (NYSE: CPER).
But just like with gold and silver, for my money the best way to cash in on the upside in copper is to invest in select copper mining stocks. Consider for example industry giant Freeport-McMoRan Inc. (NYSE: FCX).
Either way, you should see plenty of green by investing in the red metal today.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
Editor’s note: Because of the confidential nature of this short video… we’ll be removing it from the internet tonight at midnight.
You need to set aside 90 seconds to watch it right away. Click here now to view it.