Is there a copper shortage looming?
Wall Street and Bay Street traders are salivating at the prospect of a potential copper shortage – an exceptionally bullish indicator for those holding and/or looking to load-up on copper penny stocks. Copper prices went up 26% in 2021, and have gone up 109% since late March 2020:
While prices moved in this direction recently, the future outlook continues to be one of shortage. Goldman Sachs believes copper is “building towards a breakout”.
In a new research report, Goldman Sachs says the copper price is “building towards a breakout” as worries about the global economy, particularly China’s engine of growth – property, begin to ease:
“With a diversified set of demand drivers – from EVs to electrical grids – sustaining a very tight micro into 2022, we believe that copper will reprice once these broader macro concerns abate.”
Goldman says the limited seasonal build-up of copper inventories from record low levels – currently at just over 200,000 tonnes – scarcely enough to cover three days of global consumption is “entirely insufficient to tackle” its expected deficit of 197,000 tonnes for this year.
“The longer this continues, the higher the risk of extreme scarcity episode by the end of the year,” Goldman says in its report released Tuesday.
This is in-line with an earlier call by the financial giant, where they said copper will be the new oil.
In a similar vein, numerous other professionals in Wall Street have made similar calls for a copper breakout. One such per is Scott Bauer, CEO of Prosper Trading. Scott has pointed out that all the pieces are in place for copper to breakout from a technical standpoint, as a result of a triple-top (starting at 2:50).
How to play this
A great way to play this is to purchase junior copper / copper penny stocks. This acts as a leveraged play on the metal, and has the benefit of the immense upside available to small-caps / penny stocks. We remain bullish on Grizzly Discoveries (TSXV: GZD) and their Robocop and Greenwood properties. Their Robocop property lies on the Purcell Supergroup, which has played host to past-producing stratabound Copper-Cobalt mines. Robocop has shown high grades of both copper and cobalt. Cobalt is extremely valuable in the production of electric vehicle batteries. It is an expensive and rare component, of which more than 65% of the global supply originates from the Democratic Republic of Congo. Robocop has had sample grades like 1.41% Cu, 0.62% and 0.134% Co, 1.19% Cu, with silver credits.
GZD is trading at an extreme discount at 6.5 c. Our research shows this stock to be worth at least 15 c using conservative estimated and based on the inevitable demand increase of both copper and cobalt in the green transition. You can read our full report here: https://www.tsxvresearch.com/research/gzd-cobalt-copper-tsxv/