Copper Could See a Comeback as Demand Outpaces Supply

Investors are waiting to see if gold can retain its luster from 2023. Meantime, copper could be picking up where the precious metal left off. A bounce-back after 2023 weakness could be in store for copper if demand continues to outpace supply in 2024.

As opposed to simply a store of value, the metal’s industrial use gives it utility especially in the coming years. That’s because more consumers are expected to rely on electric power over fossil fuels. From motors to batteries, the metal plays a vital role in electric vehicles (EVs). And as more of them hit the road in the next decade, the growth prospects for the metal remain bright.

Copper Needed for the Green Revolution

Gold will always be an important metal for us, but I think copper is probably my favorite metal for the moment and probably will be for some time, just because of the amount of copper needed for this green revolution,” said Warwick Smith, CEO of American Pacific Mining Corp. “If there’s going to be this green revolution, it’s going to be led by copper.”

To obtain the growth exposure that rising prices for the metal can offer if demand continues to outpace supply, investors can opt for an alternate play via the metal’s miners or more specifically, the Sprott Junior Copper Miners ETF (COPJ). The fund seeks to provide investment results that track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses.

“If you want to be carbon neutral by 2050, you will have to take the amount of copper that’s been produced since the beginning of time and triple it in the next 20 years or so. It’s wild how much copper will be needed,” Smith added. “We’re going to have a copper crisis in about ten years, and I think everybody knows. They just don’t want to acknowledge it.”

A Broader Play on Critical Minerals

Part of the metal’s appeal is its inclusion as part of critical minerals that will be necessary in the global shift to alternative energy sources. That said, to get broader exposure to critical minerals, investors can consider the Sprott Energy Transition Materials ETF (SETM). It seeks to provide results that correspond to the total return performance of the Nasdaq Sprott Energy Transition Materials Index. It essentially tracks the performance of a selection of global securities in the energy transition materials industry.

The demand for overall critical minerals is projected to rise. That’s because more countries are looking to meet their carbon emissions reduction goals. In turn, the demand for miners that materially affect the extraction of  supply will also increase. Given this, SETM provides investors access to the miners who produce uranium, lithium, copper, nickel, silver, manganese, cobalt, graphite, and also rare earth elements.

For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.