Gold Has a Copper Problem

Hinzugefügt: 2026-05-31

[00:00:00]So, why is nobody talking about copper right now? It's growing at 3.4 times the rate of gold this year. It has a very, very similar setup to silver before silver blew up. And everyone just seems to be ignoring it. And why does it look like silver? Because China is choking off the world's supply of copper, just like they did with silver before silver blew up, right when we need it most, by the way, because demand for copper is increasing. And between China and Iran, which we'll talk about Iran in a minute, the straight of Hermuz is important to the copper story, too. Uh but between China and Iran, around 700,000 tons of copper production is just offline in a market that was already 300,000 tons short every year for the last few years.

[00:00:39]So you don't need to be an analyst to see how this thing is going to play out.

[00:00:42]And look, by the way, I'm not telling you copper goes up tomorrow. Uh and I don't care if it dips next week or dips next month. This is a multi-year position for me. I'm adding copper as the third leg next to my silver and gold. So I'm going to hold silver, gold, and copper. Honestly, I'm going to have so much metal in my portfolio, I need to legally change my name name to Magneto.

[00:01:02]That's such a dumb joke. So, let's discuss why this is the cleanest of all metal setups right now. In case you don't know me, my name is Nick. I've been a professional investor. I'm professional trader for 24 years. Before I start, I'm not a financial adviser, and this is definitely not an inducement to buy or sell any assets. And as always, do not take financial advice from some random dude on YouTube. Today, we need to discuss three things. Why is gold flat while copyring? Why is the gap widening? and why I think copper will be the next silver. To understand why uh what's coming for copper, I need to start with a with a bit of a story. And this is my favorite story in the history of metals. By the way, January 2003, copper is at 80 cents a pound because copper is measured in in pounds for traders. Uh 50 years lows uh when you adjust for inflation, mining companies are just going bankrupt all over the place. The whole industry is hated. Wall Street is obsessed with the dot recovery. tech is back blah blah blah blah blah so nobody is paying attention to metals because they never do right meanwhile on the other side of the world China has joined the world trade organization most people don't think much of it I mean China is just the place where they make plastic toys now there's this Canadian mining guy called Robert Freedelland strange dude strange dude he used to live in an ashramm with Steve Jobs in the 70s I'm not making that up it's insane so Freedelland owns a copper company called Ivanho mines and in 2003 while every fund manager on earth is buying tech freeland goes on television and says copper is the new oil. People literally just laugh at him.

[00:02:36]This is a running theme with metal stackers by the way. You always get laughed at but eventually the guys aping into tech bubbles end up broke while metal stackers hold true value. Anyway, whatever. Uh Freeland was doing the actual math. China is starting to build cities at the time, roads, power grids, railways, apartment blocks, you know, tens of thousands of factories. Also, all of this needs copper. And here's the thing about the copper supply. You can't just turn on a copper mine. The major mines in 2003 with the same major mines that existed like 10 years earlier in 1993, supply just doesn't really increase for copper. So 2003 ticks over to 2004. Copper goes from 80 cents to a dollar. Wall Street says, "Oh, it's a cyclical bounce. Uh, it'll go back down.

[00:03:20]Focus on tech stocks." Then to $150, then to $2. By 2005, copper is at $3 a pound. Nobody on Wall Street is talking about it yet. Even though it's been pumping, nobody talks about it. They're still talking about Google's recent IPO.

[00:03:34]I think that was like 6 months earlier.

[00:03:36]So, copper then hits $4 a pound, 5x in 3 years. Now, Wall Street finally notices.

[00:03:43]Goldman's Commodities Desk publishes a note about an emerging market demand late as usual. City launches a copper index fund. The trade becomes it just becomes obvious. Everyone's crowding into it years late. Then in 2008, the financial crisis happens. Copper craters to $130. Everyone says, "See, we told you it was a bubble, of course." Except it wasn't because the structural story hadn't changed. China kept building.

[00:04:06]Demand kept growing. Supply still couldn't catch up. So by February of 2011, it pulled out of its nose dive and it hit an all-time high again of 465 per pound. So if you bought at 80 cents in 2003 and held through to 2011, you'd be up like 500%. Now that sounds good. But here's the other thing. Anyone holding the right copper miners through that cycle did even better. Freeport Macaran went from $4 to $63. Southern Copper went from $5 to $50. 10 to 15 baggers just sitting there. Ivan Hoe, by the way, the one we started the story with, Steve Jobs's mate, uh, who made a fortune off copper, that didn't IPO until about 2012, though, so we're not counting that in our, you know, how many X's copper mines did. Now, that was the first era of structural rerating for copper from a forgotten metal to a strategic resource driven by demand from part of the world that, you know, traditional finance was not watching at the time. It's changed a lot over the last 20 years. Now, we're about to enter the second era. Demand is exploding, supply is being choked off, and copper is starting to take off again. How?

[00:05:11]Well, let's talk about the numbers. Year to date, copper is up over 10%. Gold is roughly 3%, a bit less than that, actually. So, copper is running at 3.4 times the speed of gold in a single calendar year. Right now, the rotation has already started. Copper broke its all-time high this year, but not by much. Now, a lot of people are going to say to me, why buy copper near its all-time high? First of all, I've been buying for quite some time, so not near its all-time high, but I'm still buying now on the dips. And look, you could have said the same about gold when it hit 2K in two in 2023. That was the all-time high. Or silver when it hit $50 in November of last year. That was the all-time high. They still went up beyond that. Alltime highs are meant to be broken, especially when all the fundamentals line up. And the way I see it is, uh, I I I want more metal exposure. And since 2022, silver is up what, like 350%, gold is up 200%. Where is copper? It's only up 100% in that same time period. Gold is quiet because it's already moved. It's already had its move. So is silver. And look, I'm not saying I'm I don't want to hold gold and silver. I like gold and silver. I hold a lot of it. Uh but central banks bought, right? ETFs bought, retail bought. The trade is crowded right now. I'm bullish long-term, but I'm not in a hurry to buy more gold or silver. Copper is the opposite. It's just starting its run.

[00:06:25]traditional finance treats copper like a boring industrial cousin to to the the shiny metals. Uh they think it's boring just like they did with silver in 2022 and copper in 2023. Anyway, why am I looking at copper? Let's actually talk about this demand. Demand is the reason.

[00:06:42]Forget the wiring in your house. Uh all the stuff that runs through your walls for a minute. That is kind of that that is lowkey demand, but the high demand is coming from AI AI data centers. There is massive demands from demand from them.

[00:06:57]So a single megawatt of hypers scale AI data centers use 27 to 47 tons of copper for a single megawatt. I I think I said single watt. Single megawatt uses 27 to 47 tons of copper. The bigger AI campuses are around 100 to 150 megawatt.

[00:07:13]So you know do the math there. So a single campus can eat tens of thousands of tons or more. Microsoft's uh Chicago data center by the way it was built in 2009 used around 2,170 tons one site that was just one site and that was preAI the new ones use three times that so by 2030 AI data centers alone will consume consume roughly 500,000 tons of copper per year and remember the global deficit for copper is 300,000 tons per year so uh just AI by itself is going to going to almost double that deficit oh and by the way demand is expected to grow by more than 40% by 2040. Why? Well, one example is the Mag 7, which announced over 650 billion in AI capex last year. Most of that is going into building AI data centers. And like I said, they use a massive amount of copper. Solar is another one. So, a lot of the hype around silver, rightly so, was around solar panels because a lot of silver is used up in solar panels. But an Australian company called Sundrive recently cracked direct copper plating and that hits 26.4% cell efficiency, which is up there with silver. It's as efficient as silver, maybe even better in some application uh applications rather. So, with silver prices rising, solar panel manufacturers are desperately trying to find alternatives.

[00:08:29]While we can't be sure these will will hit the market anytime soon, when they do, it will increase demand for copper.

[00:08:35]If you think about it, copper is about 100 times cheaper than silver and roughly 1,000 times more plentiful. So, the solar industry switching from silver to copper isn't a maybe. It's already happening and it's really just a matter of survival. I'll give you an example.

[00:08:48]So, if you get solar company 1 and they charge 10K per solar panel, I'm making up these numbers. And it's 27% efficiency on that solar panel. Then solar comp solar company 2 comes out and charges 7K, 3K less, and it's 26.4% efficiency. A lot of people are just going to go for option two cuz it's significantly cheaper and the efficiency isn't that different. Plus, also EVs and then you got grid upgrades, uh, plus everything else we're electrifying around the world. S&P Global puts global copper demand at 42 million tons by 20 240, 50% above where we're at now. So the next question is where does copper come from? And this is where it gets bleak. The average new copper mine takes 24 years to go from discovery to first production. 20 24 years. I know that's hard to believe, but but it is true. In the US specifically, it's 32 years.

[00:09:39]Second longest on Earth, worse than basically everywhere except Zambia. So resolution copper in Arizona discovered was discovered in 1995. The joint venture formed in 2004. Permits were filed in 2013. Still stuck in 2026 across Bush's uh administration, Obama, Trump, Biden, and then Trump again. So resolution alone uh would supply I think 25% of the US copper demand. And it's been sitting in regulatory limbo for 31 years. And then there's refining. China refineses roughly 45% of the world's copper but by the end of 2026 that's tracking to be around about 50%. And they mine only 13% of it but then they refine half of it. Same trick they pulled on silver. Same trick they pulled on rare earths. Control the cho choke point control the price. Now let's discuss the other catalysts uh especially the straight of hormuz which has been effectively closed to commercial shipping since late February roughly 3 months now. Now the Iran situation I'm not going to bore you with it. We all know it. We don't want to talk about Iran, but half of the world's seaborn sulfur trade goes through the straight of horm. Why do we care about sulfur? Because sulfur becomes sulfuric acid. And sulfuric acid is what you use to leech copper out of lowgrade ore.

[00:10:52]About 1/5if of all global copper production uses this process. Without the acid, the copper just sits in the ground. So sulfuric acid prices have gone from 149 a ton to 307 in weeks.

[00:11:05]106% jump. I should have invested in sulfuric acid. Can you invest in sulfuric acid? I don't know. Anyway, then on May 1st, China announced it's banning sulfuric acid exports until the end of 2026. They always do this. They they always do this. China makes more than 40% of the world sulfuric acid. So, the global copper industry just lost its biggest supplier and its main shipping route in the same quarter. So industry estimates are that this puts around 500,000 to 700,000 tons of copper production at risk on top of the already existing deficit of 304,000 on top of the AI data centers requiring a lot more. So China's just pulling the same playbook as silver. China knows what it's doing. So where does that leave price? Well, copper is kind of funny because almost every 2026 target from the banks uh that was set, you know, they mentioned in 2025 has already been hit. Goldman Sachs forecast 10,700 in the first half of 2026. Then copper touched 14,500.

[00:12:03]Uh city called 13,000 a ton by Q2 of 2026. And obviously copper has blown through that. It went to 14,500. Then JP Morgan that the same JP JP Morgan who paid $920 million for manipulating precious metals markets called for I think 12,000 a ton on average for 2026 with a Q2 peak of 12,500. the Q2 peak was uh once again 14,500. So when JP's Commodity Desk is publishing the those $12,000 targets for clients, their proprietary book is positioned a lot higher than that. I mean allegedly anyway. So every short-term target is in the rear view mirror so far. The forecast worth watching is Goldman's long-term call 15,000 a ton by 20 2035.

[00:12:45]But you know how I look at it is these banks will always say, "Oh yeah, it's going to go to 15K." But in reality, it's probably going to go further because uh they're just trying to position themselves and they're trying to temper expectations. Uh demand is overtaking supply, right? That that that's what's happening. And remember 2003, this is why I mentioned it at the start of this video. 2003 to 2011, the setup that that pushed copper up like 500%. The trigger this time is is is bigger than China industrializing 100 megawatt data centers while electrifying everything else on the planet. And also China is contributing to this in a different way this time by choking off supply. So my personal target, I'd be surprised if we don't see 20,000 a ton before 2030. Uh look, I could be wrong.

[00:13:32]I've been wrong many times before, but the structural case is the strongest I've seen in any metal since silver.

[00:13:39]Okay, so how do we actually play this or how am I playing this? Step one, it's just be okay with waiting. I I'm not saying that copper won't dip from here or that it that it'll go flying up next month. It might take a while. I'm just stacking and waiting. It is boring, but it has served me well for like 25 years, this strategy. So, I'm just going to keep doing it. Step two, no leverage.

[00:13:59]And no exceptions to this rule. I'm not buying copper with leverage. I'm positioning over time on the dips.

[00:14:04]Honestly, if it goes down from here, I'm happy because it allows me to buy more.

[00:14:08]Step three, and this is the awkward bit uh that I know a lot of you probably won't like. The spot price for copper is roughly like what uh I'm doing it in my head. It's roughly about 40 cents per ounceish, something like that. Maybe 42, whatever. The cheapest 1oz copper coin that I found is about $4.

[00:14:26]And I haven't looked very hard, but you know, that's roughly what it is. That's a 10 times premium just to own physical copper. For silver and gold, the premium is like 5 10 20% depending on where you're buying for from. For copper, it's uh 1,000%. If you want to fill your your bunker or your garage with copper bullion, you're paying 10 times spot.

[00:14:46]It's it's just not a viable play uh unfortunately. And sorry copper stackers, the math is the math, right?

[00:14:52]So exposure goes through miners, the big diversified, pure play copper companies, also some smaller developers if you can stomach that kind of volatility. uh and a few ETFs. And I know I don't like ETFs. I know. But it's just the reality.

[00:15:07]I don't want to buy copper bullion at 10 times the price and find space for literally five tons of copper in my garage. My garage is not that big. And I I don't think my wife would appreciate it. And look, I'm not recommending specific names. Do your own work. Uh talk to a registered adviser. And remember, copper miners get smashed harder than metal in a recession, which which is why we need to talk about the risks, right? There are three big risks with copper. first a real recession which I think might come sooner or later. Copper is the most economically sensitive metal we have. If we if a recession hits before the deficit fires, copper drops first and it drops hardest.

[00:15:40]But the counterweight is the multi-year horizon. Remember how I said that it dumped in 2008, the 2008 recession? Then it went flying up for the next few years and it hit a new all-time high by 2011.

[00:15:51]So it it dumps hard, but it can also recover pretty hard. Second, China dumps uh reserves. That's another big big uh scary potential. The Chinese state reserve bureau is sitting on around about 1.5 to 2 million tons of strategic copper. Uh that's analyst estimates.

[00:16:09]Nobody knows exactly though if China dumps the the price crashes shortterm.

[00:16:13]So that's a definitely a risk, but it doesn't change the long-term math in my opinion. Third, a genuine supply unlock.

[00:16:19]Maybe new mines ramp up faster, maybe a deal on a resolution. It's always possible, but the 24-year mine timeline says even if it happens, copper, the new copper supply probably won't show up for a decade. So, uh, that's the copper case. Multi-year position, structural deficit, supply shocks firing off right now. Banks quietly aligning on that 13,000 to $15,000 a ton target over the next decade. But, you know, my target is a bit higher than that. And almost nobody in retail is talking about it yet. But, you know, that is why it's up more than gold and silver. Few are ready for it. few are ready. Anyway, hop into my free Discord links below. I'll see you in the next one.