May 11, 2021

Copper is the New Oil | Ed Milewski Q&A

Midas Letter
Midas Letter
Copper is the New Oil | Ed Milewski Q&A
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Ed Milewski answers viewer questions as to why copper is so hot right now. He even goes as far as to say that “Copper is the new oil”.

Global copper supply shortages coupled with the rise of electric vehicles (EVs) – which are projected to be 20% of auto sales by 2030 – could appreciate its price levels far beyond the current record highs.

“We could see $9 /pound in the not-so-distant future.”

Watch the full Q&A video to uncover some opportunities Ed is looking at to capitalize on this trend and much more.

Transcript

Copper Prices

So, I’ve been involved in this copper play for some time. And in the last year and three months we’ve gone from say the low twos, we’re now into the mid high fours. And no one’s ever seen this price. You’ve got two of the biggest copper producers, Peru and Chile. They’re talking about imposing special taxes on profits. Yeah, you just wonder what’s around the corner. Once in a while, a commodity gets rerated as we saw oil, get rerated in the seventies. I lived through that and gasoline had a big, big move. We may be seeing that in the copper in the copper complex. They say you can’t transfer energy without copper. Nothing’s coming on stream. It could get wild! I think it’s going to seven, eight, $9 a pound very quickly. That’s just a humble viewpoint.

Why copper is exploding?

Someone said a lot of the users of copper use this just-in-time inventory. So the inventories are low and all of a sudden you got this push by all the world powers to electrify. And you can’t transfer energy without copper. It seems so stupid, but it’s acting like it’s going up. It just went through the all time high, like a s*** through a goose. Excuse my French.

US Copper Corp (Formerly Crown Mining) valuation (CVE:USCU, OTCMKTS:USCUF)

Crown mining, which is now US Copper. What a great name. Right on the Nevada, California border. It was drilled 70 years ago by a big, big mining company. No one’s looking at it. Well, more people are starting to look at this, but there’s a deposit there. There’s silver there, there’s gold there. When you start to hear about countries starting to expropriate mining companies from north American entities, you say to yourself, where would you rather have your deposit, Canada, United States? Would you rather have it in Chile or Peru? or some of these jurisdictions that are in Africa that are quite hostile, you know? Yeah. So this company is sitting here poised in my mind, it’s got a several billion-pound deposits of copper. And the price is doubled and the leverage is so… Anyway, I don’t want to sound like I’m promoting… If you have to believe in copper… I think deposits in North America will get recognized and rerated, and we’re seeing that. So, we have three deposits on this property, and one of them, I believe that it’s called the Moonlight deposit. When copper is at $4… And remember, they’ve done studies on this already, so we’re not making this up. There’s a deposit. It’s a 43101, albeit historical, There’s a PEA. At $4 copper, one deposit, and this is $4, not $4.70 Copper. One deposit has a net present value of $800 million, and that’s discounted back. A lot of people probably don’t know the intricacies of net present value and what it all means, but it basically says: Hey, you build a mine and you can sell your copper at $4 and you can do it for what we think the life of the project is. You’re going to net back $800 million. That works out to $7 a share. That’s one deposit. What if copper goes to six bucks? These valuations are exponential. A lot of this stuff just falls bottom line. Look, we’re seeing some stuff here. Copper is the new oil!

Crypto trading volume vs junior miners

I think a lot of it has to do with demographics. There’s a lot of mystery in the market. New youth, new trends, new industries. This catches the imagination of a speculator. So thats a lot of it. Like a lot of older people will not accept crypto and yet crypto when all the old people are dead, there will just be the young people. It’s just an ongoing battle for a sort of who who’s going to control what. It’s fascinating and they’ve printed so much money. Somebody said it, if you put a thousand dollars into Ethereum when it started trading. They say it’s now worth $10 million. That’s mind-boggling like, think about it. 30 cents to three $3,500.

Trends/stocks Ed is watching đź‘€

I’m dabbling in this and that. There’s a helium play that I’m looking at: Royal Helium. I didn’t even know three months ago that you could actually drill for helium, but apparently, you can. It exists in caverns and if you can find helium, you’re good. Well, it’s not done much because a bunch of free trading stock has come new, but they’re going to get a report from a very, very highly respected engineering firm, Sproule Associates. And that report ticker is RHC. That report is a very big deal. They’ve hit a big drill, a couple of wells, and they were successful. And now they’re awaiting this report from Sproule and that report indicates what they already think. They know it’s going to probably rerate the company in a pretty big way. Once these commodities start to rise, the average guy is getting squeezed. And if you start squeezing too many of the average guy, it’s not good. So I’m not saying today, but we’re starting to see some shockwaves throughout the world. You know, like, I’ll say it again. You’re Jeff Bezos, Buffet and Zuckerberg have the same wealth as the bottom half of the United States population. Three guys vs 190 million people. If you look at the world, that discrepancy gets magnified, so It’s not a good recipe for harmony and Well-being. You just wonder.. Like there’s so much debt that these rates… now they have backed off a little. So I’m watching the commodity prices. It generally means trouble down the road when they start raising them. Like if rates… I don’t know… Maybe we got a long way to go. We’ll see.

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