Weekly Update: Why I’m Buying Copper
Good evening, and welcome to this week’s edition of Stealth Trades!
Right now, I own 2 futures contracts representing 50,000 pounds of copper.
My plan, over the next few months, is to buy more.
Copper, to me, is one of the biggest opportunities in the metals space today.
And today I’m going to tell you why.
Unlike most of my trades, the case for copper is not just a technical one.
There is a fundamental shortage.
Companies like Amazon are buying entire mines to lock up supply.
Last week Stanley Druckenmiller, arguably the best investor of all time, revealed that he holds a substantial copper position.
He called it a “big consensus trade” saying there’s “no meaningful supply” and “will be very tight for the next 8 years.”
This, to me, is the closest thing to a slam dunk investment I have seen in a while.
For the last two years, gold and silver have taken center stage.
Central banks are choosing to buy gold instead of treasuries for reserves.
This shift caused the US dollar to lose value. And that combination of high demand from global banks and a weakening dollar caused gold and silver prices to soar.
But the copper situation is entirely different. It doesn’t need Wall Street or central bank buying to drive up the price. There is a genuine shortage that no amount of money can fix quickly.
And this is creating what I believe will be a huge opportunity for early investors.
Here’s the thing about the metals markets…
They don’t move for weeks and months like stocks. Commodity trends last years – sometimes decades.
Gold lay dormant for years. It went nowhere for more than a decade.
Then it started moving – surging 164% over the last two years. Silver has quadrupled over the same period.
The same is true for other commodities like corn, wheat and coffee.
Two years ago, cocoa got hot.
It went up 5-fold after going nowhere for 40 years.
And I believe copper is next.
The weekly chart of copper futures below shows it breaking out from a 20-year consolidation pattern.
This typically ignites multi-year rallies like we are in with gold and silver today.
But copper is not a precious metal. It is the physical backbone of the future. It is the metal that actually powers economic growth.
And, as I mentioned, there is a genuine shortage. Demand exceeds supply by 10 million tons annually.
Industrial demand for copper is huge. Its high conductivity makes it crucial for everything from electrical wiring and power grids to EV’s and plumbing.
Anything in your home that gets plugged in probably has copper in it.
Each year, the world consumes 28 million tonnes of it. And that number is set to grow exponentially.
A recent study from S&P Global estimates that AI alone could boost global copper demand by nearly 50% by 2040.
But there’s a problem…
We don’t have enough. Mining output is falling behind.
Copper has a projected 25% supply shortfall, and there is no substitute.
Aluminum isn’t good enough. It conducts less, expands more, and creates fire risk.
Fiber moves data — not power.
Silver is the only viable replacement, but it’s 200 times the price.
Copper is non-negotiable.
Traditionally, higher prices bring more supply.
This is the basic principle of supply and demand that drives free markets.
But in mining, it’s not that simple.
Today’s supply shortage was 15 years in the making.
After the last commodity crash, miners cut exploration budgets. They fired geologists and focused on dividends instead of discovery.
Now we’re paying the price.
It takes 15 to 20 years to bring a major copper mine online.
Discovery. Drilling. Permits. Infrastructure. Power. Roads.
Even if we started ten massive projects today, they wouldn’t produce meaningful copper until the late 2030s.
And existing mines are aging.
The easy copper is gone.
Grades that were once 5% are now 0.5%.
We’re moving mountains for slivers of metal.
Amazon Web Services inked a deal with Rio Tinto to resurrect a dead mine. They’re using experimental technology called bio-leaching — using bacteria and acid to extract copper from low-grade rock that miners used to throw away.
Amazon is one of the most sophisticated logistics companies on Earth. If copper were easy to buy, they’d just buy it.
Instead, they’re bringing a mine back from the dead to lock up supply.
It appears that Big Tech sees a shortage coming, and they’re racing to secure private supply lines before the rest of the world wakes up.
Meanwhile, the power grid itself is ancient.
The US is investing over $400 billion upgrading it.
By 2030, grid demand alone could reach 15 million tons of copper.
AI, EVs, grid rebuilds – all fighting over the same limited pile of red metal.
Copper isn’t gold. It doesn’t rise on emotion.
It rises because it’s required.
You can skip a gold necklace. You can’t skip wiring your house or powering a data center.
Demand, therefore, is inelastic.
Whatever it costs — people will pay.
And there are two ways to take advantage of this opportunity…
The first is to just buy physical copper. I did this using futures contracts. Copper futures trade under the symbol HG with each contract representing 25,000 pounds of future delivery.
If you decide to take the same path, be sure to do so carefully.
Futures allow traders to use high leverage – in this case up to 7:1. I’m sitting at roughly 2:1 leverage and only plan to increase my position once copper advances.
The other way to invest in copper, and one you can do in any IRA account, is to buy copper mining stocks.
There are several great options, but here are 3 of my favorites:
#1 Freeport-McMoRan (FCX)
Freeport is the largest US copper producer, working the massive Morenci mine in Arizona. This is the industry leader.
#2 Southern Copper Corporation (SCCO)
Headquartered in Phoenix, this company has significant revenue and several new projects in the pipeline.
The stock just pulled back to the 50-day moving average, making this an attractive place to buy on a pullback.
#3 Hudbay Minerals (HBM)
This is a smaller Canadian operator whose stock has already tripled since last Summer.
On Monday, Hudbay announced that it is acquiring Arizona copper developer Arizona Sonoran Copper for $1.5 billion in an all-stock transaction. This gives Hudbay 100% ownership of the Cactus copper project.
Combined with the existing Copper World project in Arizona, this deal will create one of the largest copper districts in North America.
This strengthens their position as a leading American copper producer with long-life, low-cost assets without the geopolitical risk of those mining in Africa.
If you want diversification, the Sprott Copper Miners ETF (COPP) does the job. It holds all 3 of these stocks along with a basket of 58 others.
There’s also the United State Copper Fund (CPER) which is designed to trace the movement of copper prices without the leverage of futures of risk or overhead of miners.
Nothing is ever guaranteed. And maybe this one is too obvious. But to me, this is just basic supply and demand.
Demand is increasing rapidly. Supply isn’t. And the market has no choice but to reprice it.
Best wishes for your trading,
Ross Givens