Goldman Sachs metal strategist Nick Snowdon believes that global renewables will push copper prices from the current $ 4.29 a pound to $ 6.80 a pound by the end of the decade. He adds that the fundamental outlook for supply and demand is so dire that it does not rule out an “absolutely ballistic” temporary price jump of more than $ 20 per pound before 2030.
Mr. Snowdon appeared on Bloomberg’s Odd Lots podcast (available on Apple podcasts here and Google here) on May 30 with a remarkably bull story. The key point was that copper reserves were already low, metal is largely irreplaceable as an electrical conductor for electric vehicles and renewable energy sources, and there is almost no new copper production on the horizon.
Goldman Sachs estimates global copper production at 24 million tonnes by 2022. Of this, only 1.5 million tonnes are spent on decarbonisation – mainly electric vehicles and new wind and solar energy.
However, according to the strategist, the demand for copper related to renewable energy sources is expected to climb to six to seven million tons per year by 2030.
In Mr Snowdon’s words, there was a “complete absence of new investment in this sector” despite the expected jump in demand. This paves the way for the largest copper supply deficit ever by the middle of this decade.
Mining companies remained disciplined in spending. The permitting process for new mines has been extended from six to 12 months in 2000 to two to three years now. The end result is that no new copper mine has been approved in the last 24 months. In Latin America and Africa, previously allowed projects will appear in the next 18 months, but then nothing.
For Mr Snowdon, the expected shortage of supply is “not solvable at current prices”, which means that prices are now too low to stimulate the necessary investment in new production. Decarbonisation will not be possible without much higher copper prices.
The price of the commodity has been weaker recently, falling 11.5 percent from a five-year high in March this year. Goldman Sachs attributes this to lower demand from China, which is limited by constraints, and higher exports from Russia than expected. If Mr. Snowdon’s longer-term predictions are correct, it will be an ideal time to add to domestic copper miners such as First Quantum Minerals Ltd., Lundin Mining Corp or Teck Resources Ltd.
– Scott Barlow, Globe and Mail market strategist
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Shares to think about
Nutrien Ltd. (NTR-T) Fertilizer stock prices fell 14 percent from a record high in April. The company has a forecast of significant profit growth for this year and is currently trading at a reasonable valuation. The average target price is approximately $ 155, which means that the share price may increase by about 26% over the next year. On June 9, management will discuss its strategic priorities and goals during the upgrade for virtual investors, which may raise the stock price a bit. A larger catalyst may come in August. Jennifer Dowty tells us more about the investment case of buying her shares in the recent slump.
Want to add more defense to your portfolio? Consider these often overlooked sector ETFs
Over the years, Gordon Pape has often recommended utilities and telecommunications as key elements in building a low-risk portfolio. But a healthy defense portfolio needs more diversity. Recent low market performance figures suggest that both basic healthcare and consumer products should be added to the list. Gordon has several ETF recommendations on how to obtain exposure.
How influencers promote cryptocurrencies without revealing their financial ties
The fall in cryptocurrency prices in May restored control of celebrity traders who sell virtual currencies to the masses. Over the past year, actor Matt Damon and comedian Larry David have starred in high-definition crypto-platform television commercials and promoted digital assets as a major opportunity to make money. A far more deceptive form of cryptocurrency promotion flourished on social networks, full of unpublished conflicts of interest and exaggerated claims of skyrocketing profits. In some cases, organizers have admitted that they have failed to disclose personal or financial ties to projects advertised on their resources, a potential violation of federal marketing regulations. And even before the recent decline in the crypt market, many of these influencer-backed companies collapsed, damaging amateur traders and sparking lawsuits that could force some celebrities to compensate investors for their losses. David Yaffe-Bellany of The New York Times takes a closer look.
The hissing recovery in energy stocks is facing fears of global growth
The scorching rise in energy stocks has left investors with a difficult decision: to endure, despite growing fears that global growth will slow or block profits in one of the few areas of the stock market that has been successful this year. So far, energy stocks have withstood the hawks of the Federal Reserve and other central banks, raising fears of a slowdown in growth that could curb energy demand. Nevertheless, there are indications that some investors may be taking profits: while the sector has grown by 11% since the end of April, according to Refinitive Lipper, there has been a five-week net outflow of energy sector funds. This was reported by Lewis Krauskopf of Reuters.
Others (for subscribers)
John Heinzl’s model dividend growth portfolio as of May 31, 2022
The US stock rally was not enough to save ARK from a record 7-month loss series
Wednesday analyst upgrades and downgrades
Tuesday upgrades and downgrades of analysts
Wednesday Insider Report: CEO and Chairman of the Board of Directors were buyers after these shares fell into deeply oversold territory
Tuesday Insider Report: President Involves Nearly $ 1 Million in This Stock Forecast to Almost Double
Russian stock trading shows that investors are testing exits
The heavy weights of the investment industry are gaining ground in the ETF market
As declining mutual fund fees raise the bar for the investment industry
Are consumer stocks a harbinger of darkness or a buying opportunity?
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Ask Globe Investor
Question: Is now the right time to invest in the stock market? The way things are going makes me nervous.
Reply: Even after markets strengthened last week, the S&P / TSX Composite Index continued to fall by almost 7 percent from its record high in early April and the S&P 500 Index fell about 14 percent from its January high.
But the point is: those losses have already taken place. They are in the past. If all else is the same, stocks are actually better today than they were a few months ago. As Warren Buffett once said, “Whether we’re talking about socks or stock, I like to buy quality goods when it’s labeled below.”
Of course, markets could continue to decline in the short term, but it is also possible that they could grow. Nobody knows. All we know for sure is that, historically, stock markets have grown in the long run. So if you are diversifying and have a long-term horizon, now may be a good time to invest.
–John Heinzl (email your questions to [email protected])
What’s happening in the coming days
Cannabis stocks have never been so popular. But are they the final contrarian investment now? David Berman will share some insights.
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