Copper prices are hitting all-time highs on what analysts see as the perfect storm of catalysts, and copper stocks are on watch as a result. In fact, some think copper is setting up to be the new Bitcoin.
So what do you need to know?
Essentially, a variety of factors are at play in creating a supply-demand imbalance in copper. As a result of the Covid-19 pandemic, producers in countries like Chile, Peru and Mexico faced supply disruptions. Analysts say that longer-term narratives, like a lack of new exploration and discovery, are weighing on current supply. Now, factor in huge demand levels.
Importantly, copper prices are broadly getting a boost from the global reopening story. But the metal has a unique appeal of its own.
During the pandemic, we saw investors increasingly turn to clean energy alternatives. This is a huge catalyst for copper prices, because things like electric vehicle batteries, semiconductor wirings and decarbonization plans all require copper. For companies like Freeport-McMoRan (NYSE:FCX), Southern Copper (NYSE:SCCO) and Turquoise Hill Resources (NYSE:TRQ), this dynamic is also a huge driver of upside potential.
Copper Stocks: The New Bitcoin?
So what else do investors need to know?
Importantly, analysts are quite bullish on copper prices and copper stocks now. This is reflected in high price targets, such as calls for the metal to hit $20,000 per ton by the end of 2025. Goldman Sachs feels similarly, setting a price target of $15,000 for 2025. Copper currently is priced just over $9,400 per ton.
Considering the supply-demand situation and these bold price targets, it seems like the game is changing for copper stocks. Some analysts are calling it the new oil, reflecting the key role copper will play in electrification and decarbonization. Because of this, some on Wall Street are ready to hop on board for at least the next five to 10 years.
But some are taking the hype even further. Barron’s wrote that copper and other metals like steel and aluminum are set to be the new Bitcoin. Why? Copper prices have gained 20% over the last month, outperforming BTC. Looking to the future, some expect that trend to continue, fueled on by pressured supply and record demand.
With copper prices climbing, be sure to keep an eye on copper stocks like SCCO, TRQ and FCX today.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.