Not all metals are created equal.
While gold and silver prices are up 16% and 18%, respectively, in 2016… copper has dropped to its lowest point in seven years.
[ad#Google Adsense 336×280-IA]And there’s still a lot more room for it to fall.
You see, it’s still about 40% above its December 2008 low.
While copper’s price fell about 45% in terms of U.S. dollars since early 2013, it isn’t down nearly as much in one critical currency during that same time frame.
Because of that, copper miners will continue to be left behind. Let me explain…
First, take a look at the chart below of the copper price going back to 2008.
Copper fell to a low of $1.95 per pound on January 15 this year. Since then, it has traded back and forth and is down about 2% for the year at $2.10 per pound.
That back-and-forth action left copper miners behind.
While many gold stocks, like gold-mining giant Barrick Gold (ABX), rose triple digits from their 2015 lows, copper miners haven’t performed nearly as well. Giant copper miner Southern Copper (SCCO) is up just 2% in that same span.
Part of that trouble comes from copper’s fundamentals. You see, it’s a true commodity. Like iron ore, aluminum, and oil, copper’s price moves on supply and demand. When the price of a commodity falls, it typically kills production.
We’re seeing that happen with oil right now… but not with copper.
Also, while the price of copper in U.S. dollars has fallen 44% from $3.75 per pound in February 2013 to $2.10 today, it has only dropped 18% in Chilean pesos during that span.
That’s important because Chile is the world’s largest copper producer. It’s not even a contest. Look at the table below of the world’s largest copper-producing countries…
As you can see, Chile produces as much copper as the next four countries combined. So the price of copper in Chilean pesos is critical to understanding the copper market.
And in a recent interview, the CEO of major Chilean copper miner Antofagasta (ANTO.L) predicted a supply glut through 2017. His company will produce 700,000 metric tons of the metal this year.
That’s why we’re avoiding copper miners in the Stansberry Resource Report right now. This rally in gold and silver isn’t going to extend to copper anytime soon.
Don’t make the mistake of thinking those “cheap” copper miners are going to soar. Too many factors are working against the metal today.
Good investing,
Matt Badiali
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Source: Growth Stock Wire