Demand for This Asset Is About to Explode Higher.
Forget “a penny for your thoughts.”
Thoughts are worth 2.6 cents these days. But only if you’re taking payment in pre-1982 pennies.
Before 1982, Uncle Sam’s minting minions made pennies from 95% copper and 5% zinc. Today, they’re mostly zinc.
Because of all that copper—2.9545 grams per penny—those pre-’82 Lincoln cents are today worth 2.6 cents because of their copper value. That means $100 in old pennies is actually worth $256.40.
Now, you can’t run around melting down U.S. coins.
Apparently, the G-men get upset about that.
Nevertheless, that huge chasm between the face value of those older pennies and their true market value brings us to the point of today’s dispatch: The investment case for copper… and the changing face of the U.S. economy.
In the past few days, the banking crisis has bubbled back up to the surface.
This crisis first began in March with the collapse of Silicon Valley Bank and Signature Bank. Now another bank, First Republic, seems like it’s about to hit the wall amid a bank run that saw $100 billion in deposits leave accounts.
More bank runs are likely in the weeks and months ahead… and more bank collapses.
We are witnessing the emergence of a new era in America.
For more than a decade, interest rates hovered at or near 0%, meaning the American government, businesses, and consumers could borrow incredibly cheaply. This was the era of debt-based growth. Tech companies, in particular, used this approach to grow rapidly.
Today, interest rates are at about 5%.
The era of cheap money is over. Tech companies that relied on this easy money are going out of business or laying off huge numbers of workers. And the banks that used this cheap money to make risky investments, or that failed to account for the rapid rise in interest rates, are collapsing.
This means one thing for us as investors: We need to protect ourselves now… and the best way to do that is to reject this destructive debt-based growth and turn to real, hard assets with intrinsic value.
Assets like gold, silver, and… copper.
I began telling you about the return of hard assets two years ago, when I wrote that commodities were entering a new long-term uptrend called a super-cycle.
Few commodities will benefit from this uptrend more than copper…
See, we’re moving into an age when copper demand is going to explode mightily.
One statistic: By 2035 the world will be demanding more copper per year “than all the copper consumed in the world between 1900 and 2021,” according to Daniel Yergin, one of the world’s foremost energy experts.
Driving that demand is the world’s rush into green energy.
Though that rush is misguided—green energy is not nearly ready to supply the world with all the electricity it needs—“misguided” has never stopped governments from doing the wrong thing at the wrong moment.
So, here we are…
The upshot of this misguided push toward a green tomorrow is a huge opportunity for those who own copper.
Copper is the oxygen that the green energy industry cannot live without. It goes into basically everything that we use to electrify our world, from wiring to batteries.
Re-electrifying the world with green energy—and replacing the world’s existing gas-powered auto and truck fleet with electric models—demands a volume of copper that is astounding in its quantity.
One small example: A conventional car requires about 49 pounds of copper to build. A fully electric car requires 183 pounds.
Last year, consumers bought 67 million cars globally. Apply the copper-per-car math and you begin to get a sense of how much copper the world is going to consume in the race toward a green future.
The irony, of course, is that copper mining is one of the dirtiest industries on the planet. But, hey, I’m not here to pick a fight with environmentalists. I’m here to find interesting ways to profit in the various investment markets that exist.
And copper is clearly one of the best opportunities out there today…
Owning the red metal is a way to diversify out of overvalued tech and banking stocks. It’s a way to own a hard asset that’s essential to the green future… which is happening whether that’s a good idea or not. And it’s a way to preserve wealth when the U.S. dollar is collapsing and banks are failing.
In that way, it’s a little like gold. (Copper is even called “poor man’s gold.”)
I’ve already added a high-quality copper miner to our Global Intelligence Portfolio.
That stock is up 10% in a month, and it will go much higher in time, at least another 30% from here… maybe 50% or more, depending on how copper prices move.
To me, this is just another sign that we’re on the right track with our portfolio.
We invest to protect our wealth from the big risks that clearly lie ahead, such as U.S. government debt and banking collapses… and we invest to take advantage of the big, broad, long-running themes that are shaping the future, like the commodity super-cycle that began post-COVID.
That super-cycle encompasses not just industrial metals like copper, but precious metals like gold and silver, and other commodities such as food and fertilizer, and of course oil and gas. Which is why most of the commodity plays inside the Global Intelligence Portfolio are performing nicely, with oil, gas, and gold plays up 6% to 17%.
In a market that’s still well below its post-COVID high, I’ll happily take those gains, knowing more are on the way as this super-cycle powers ahead.
Copper is not as sexy as a new iPhone model or a new Tesla… and it’s not an obvious way to protect and grow your wealth amid a banking crisis…
But the future (and iPhones and Tesla cars) demand copper. So that’s where we want to be positioned.