February 19, 2021
We talked about copper yesterday. What was the biggest mover in global markets today? Copper.
Copper was up 4% on the day.
Here's another look at the chart, comparing this move to the move from the depths of the global financial crisis…
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If we compare the absolute price move, it projects a move to the mid $5 area (another 30% higher). If we compare the percentage move, it projects a move to $7.67 (87% higher).
Considering the glut of currency being printed and the unending deficit spending, this time relative to the post-financial crisis response, I would argue the extreme of the two projections, is in store for the price of one of the world's most important metals. This aggressive repricing in copper should be a good warning of where broad consumer prices are going in the coming years. Now, this sharp rise in copper prices has put a fire under the profitability of producers. Here's a look at the Freeport McMoran chart, the world's largest producer of copper. |
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As you can see, you get leveraged exposure to these commodities through the producers. Freeport stock has gone up 8-fold on a just double in the price of copper. As we discussed on Wednesday, I suspect gold miners may be set up for a similar opportunity, to get leveraged exposure to gold prices, which have pulled back 14% from the August highs — disconnected, at the moment, from this inflation theme.
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