Copper outlook

Consider this, the world uses up one Escondida per year. That's the world's largest copper deposit, swallowed up by humans every single year. Do we find an Escondida every year? Not even close.

We all know commodity prices don't reflect their true supply and demand but they reflect what speculators think. With the markets contracting, copper is sitting well under $2 and a lot of copper mines are feeling the tight pinch and at risk of closing if these prices remain where they are. This, as we all know it is a cycle, copper will rebound and I think sooner rather than later, we simply use up too much copper and are not finding enough of it. The demand will shrink in the next little while but like the other metals, it will recover, maybe $4/lb was too much but $1.68/lb is definitely too low. Copper is a safer bet than most other base metals, we just don't chew through as much nickel, lead and zinc as we do copper, China and India are the especially strong buyers of the stuff and I don't care what "reduced growth" they keep talking about they are still predicting 8-9% growth for China over the next few years. It's not 12% but it's still a hell of a lot. Unless we find a few Escondidas we're going to be setting ourselves up for some more copper theives running around construction sites robbing people in a few years.

I was talking to the exploration manager of one of the world's largest copper miners the other week and this was the point he kept repeating, the suppression of copper prices simply cannot last very long. Juniors are still scary material to touch but a major or mid-tier producer might become pretty attractive right now.

Of course, do your own due diligence, it's still a rough place out in the mining investment sector but there's money to be made.