Ignore Gold's New Highs – Look Here Instead

Core Viewpoint - Copper is positioned to outperform gold and other commodities, driven by strong demand from global manufacturing and AI, regardless of Federal Reserve interest rate cuts in 2024 [1][11]. Group 1: Commodity Supercycle - A new commodity supercycle began in the summer of 2020, leading to significant investment gains in related commodities, including copper [2]. - Commodity supercycles are characterized by initial investment gains followed by potential losses in later stages, making early monitoring crucial [3]. Group 2: Current Market Dynamics - Despite a decline in commodity prices after a peak in 2022, the supercycle is not over, as price fluctuations are common and long-term supply issues persist [5]. - The "commodity comeback" is anticipated to start in 2024, suggesting a resurgence in commodity prices, particularly copper [6]. Group 3: Investment Case for Copper - Copper has shown strong momentum, outperforming the S&P 500, with a 23% increase in the Global X Copper Miners ETF (COPX) compared to the S&P's 7% rise since early February [10][11]. - Historical data indicates that if the Federal Reserve cuts interest rates, copper is likely to outperform other commodities, including gold [11]. - The demand outlook for copper is robust, driven by its essential role in technology, AI advancements, and the green energy transition [12]. Group 4: Supply and Demand Factors - Current copper supply is insufficient to meet projected demand, which could nearly double by 2035, exacerbated by challenges faced by mining companies [12]. - The construction of AI-related data centers is expected to significantly increase copper demand, with estimates suggesting a 0.5% to 1% rise in global demand [14]. - China's economic policies and growth targets are likely to boost copper demand, as the country consumes approximately 60% of the world's copper [15]. Group 5: Investment Strategies - The Global X Copper Miners ETF (COPX) is recommended as a strong investment option, holding a diversified portfolio of top copper miners [16]. - Freeport McMoRan (FCX) is highlighted as a specific investment opportunity, with previous significant returns for investors [16].