Copper: What a Difference a Day Makes

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Copper prices – in line with a broad retracement across the hard commodity sector – shaved off ~4 percent of its intra-day price from $4.55 down to $4.32 in about a 12 hour period starting at precisely 9 pm Eastern Time. Somebody had decided the copper bull market needed to be reversed.

This would not have been particularly noteworthy had it not coincided with a disinformation campaign of biblical scale in mainstream media.

copper chart

The Federal Reserve’s Open Market Committee is winding up a two-day meeting whose summary statement will proclaim that the recent runaway inflation inherent in copper, lumber and a range of other commodity prices, was a ‘transitory’ phenomenon, but is now safely in the rearview mirror.

Mainstream financial media dutifully parrots the proclamation in temporal unison, and another global financial system manipulation by the Federal Reserve is adorned with the mantle of economic credibility.

Meanwhile, the Fed has been tapering the injection of funds via quantitative easing in the overnight reverse repo market by over $500 billion even while still buying $120 billion of bonds to stimulate the economy. This is to avoid the Taper Tantrum that crashed markets when the Fed announced Tapering back in 2014.

Never mind that the world’s number 2 producer of copper – Peru – has just elected a Marxist government whose leader Pedro Castillo has pledged to raise the Peruvian share of mining proceeds to 70 percent – a move that would almost certainly see foreign investment in Peruvian mining operations evaporate overnight.

Also ignore the fact copper demand is expected to rise to 1700 kilotons by 2027, thanks to the requirements of the progressively electrified global fleet of automobiles, trucks and buses.

According to Copper.org, “While conventional cars have 18-49 pounds of copper, hybrid electric vehicles (HEV) contain approximately 85 pounds, plug-in hybrid electric vehicles (PHEV) use 132 pounds, battery electric vehicles (BEVs) contain 183 pounds, a hybrid electric bus contains 196 pounds, and a battery-electric bus contains 814 pounds, most of which is used in the battery”.

There is no fundamental argument for a lower copper price in the long or short term. There is only the requirement by the financial system that we believe all is well and we should carry on, nothing to see/hear.

The evident ability and intention of mainstream financial media to parlay the messaging from the Federal Reserve into price manipulation in the face of fundamentals is emblematic of the times we live in.

Far from levelling the playing field for all market participants, the emergence of a technology and information infrastructure tightly controlled by a global cartel of companies – themselves controlled by the largest shareholders of those companies – the new information system delivers control over public perception to the oligarchical elite who thus act as a shadow government behind the national illusions of democracy we are led to believe is dominant. Institutions like the Federal Reserve sanitize the continuous flow of government sponsored quantitative easing with regular proclamations that are then legitimized by repetition in the media.

That provides a brilliant opportunity for investors who have learned to ignore the Pavlovian whistle of the Federal Reserve/Financial Media echo chamber. The more rational argument for copper prices is that they are likely to double from here in the next few years, global disinformation dissemination system notwithstanding.

By way of disclosure, I have an investment in a copper exploration project in California. The price swoon in copper has caused that company’s shares to fall by 20%, and so I have orders in to continue building a position.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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