Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

June 19, 2018 | Dr. Copper’s Forecast Is Looking Good

Lobo Tiggre, aka Louis James, is the founder and CEO of Louis James LLC, and the principal analyst and editor of the Independent Speculator. He researched and recommended speculative opportunities in Casey Research publications from 2004 to 2018, writing under the name “Louis James.” While with Casey Research, he learned the ins and outs of resource speculation from the legendary speculator Doug Casey. Although frequently mistaken for one, Mr. Tiggre is not a professional geologist. However, his long tutelage under world-class geologists, writers, and investors resulted in an exceptional track record. The average of the yearly gains published for the flagship Casey publication, the International Speculator, was 18.5% per year during Tiggre’s time with the publication. A fully transparent, documented, and verifiable track record is a central feature of IndependentSpeculator.com services going forward. Another key feature is that Mr. Tiggre will put his own money into the speculations he writes about, so his readers will always know he has “skin in the game” with them

I’ve been writing for years that copper is headed for a major structural supply deficit. Governments in major copper-producing countries are strangling supply, and it’s getting more difficult to permit new copper mines everywhere in the world.

Even a global economic meltdown would only delay the coming supply crunch temporarily. The escalating global trade war could tip the world in that direction—but nobody wants to happen. The odds favor negotiations leading to new trade agreements. That will be good news for copper and all industrial minerals.

Add to this copper’s key role in the new energy paradigm, which goes well beyond the copper used in electric vehicles (EVs), and we’ve got an extremely bullish case for investment.

Even with the recent pullback due to trade-war fears, copper is still up over 20% compared to a year ago. According to my projections, that’s just a beginning.

The Model

I’ve developed a model for forecasting supply surpluses and deficits in the key minerals essential to the new energy paradigm, including copper. My model takes conventional copper industry trends into account, and assumes an estimated average of 71.5 kg of copper per EV. Instead of predicting a single most probable case for EV adoption, I show a range of probable outcomes (scale on the right). My model also includes new mines coming online and old mines being depleted.

As you can see below, my model shows copper going into a modest supply deficit now. That only gets worse (or better, depending on your perspective) as far as can be reasonably projected into the future.

As a resource speculator who prefers to go long rather than short, I’m looking for supply deficits to drive prices higher. If my full range of likely outcomes shows a supply deficit, I know I’m likely on to a good speculation. That’s exactly what we have here.

There’s no need to beat this one to death. Copper is already a great speculation today—with or without the boost I expect from EVs—and it looks set to become an even better speculation for years to come.

That’s why I wrote about two copper companies I’m buying into in this month’s Independent Speculator. (One of these gives me exposure to nickel and cobalt as well, which I’m also bullish on.)

If you have your own picks, that’s great. A day like today, when scary headlines have prices dropping sharply while value remains largely unchanged, is a great day for buying.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

June 19th, 2018

Posted In: Louis James

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.