Extract from very good article from Forbes. To read the full article see link and the end of post.
Are we in the early stages of a Bull Market run for Copper based on supply issues?
MAR 21, 2017 @ 01:16 PM 2,921
The Little Black Book of Billionaire Secrets
China Unleashes A Major Copper Bull Market For The Second Time
Copper has been on a tear since the election. Is this a flash in the pan, or the start of big moves in many basic commodities similar to the last time the world's economies were growing?
Bruce Pile says copper is just getting started.
Bruce started his Marketocracy fund in January, 2001. For the past 16+ years, he has outperformed the S&P 500 almost 1% a year. For the last 3 years, he has outperformed the average U.S. equity mutual fund manager in Morningstar’s database. Before taking anyone’s investment advice, you should always check out their track record.
Here’s Bruce’s.
Ken Kam: The Global X Copper Miners ETF (COPX) is up about 35% since the election. This is more than normal market fluctuations. What's going on with copper?
Bruce Pile: Jesse Moore has an excellent series of reports on copper at Seeking Alpha. He began predicting a bear-to-bull turn in copper back in March 2016, when copper was in everyone's doghouse, including mine. He was saying that within 12 to 24 months the bear would be a bull. We are now 12 months from his call, and copper is stirring from its bear slumber.
His first in the series was a country-by-country
look at copper mining projects, and he compares his result with that of Chile's government. Why should we care about Chile's copper work? Because they are the biggest copper supply in the world, giving us about one-third of the metal. The whole Chilean economy centers on copper. Then there is the International Copper Study Group (ICSG) that does a projection as well. Moore's summary:
I believe both groups have not taken proper account for delays in a startup or ramp of new mines, grade reductions in Chile, water shortages leading to unplanned shutdowns, reduced capital expenditure, and the replacement of risk-taking CEOs with risk-averse CEOs who have slashed budgets across the world.
Copper is not iron ore, and it is not nearly as easy to find and produce. The current copper price does not support growing supplies, and it appears that some producers have begun to put their collective shovels down. In reality, the world needs another mega-project before 2020, and we just don't have one coming. The major deposits are, for the most part, found. $3.00 per pound will easily bring on plenty of supply, but again, my belief is it will be too late.
My guess is that we start to see the shortage become obvious near the end of the first half of 2017. Prices will overshoot and what we saw during the China boom won't be out of the question
https://www.forbes.com/sites/kenkam...bull-market-for-the-second-time/#66ff9a907cc1
