Rick Rule Sees Base Metal Bull Market In First Inning
By November 6, 2017– Published in on
Industrial metals like copper, nickel and zinc have really picked up steam over the last few months. This has prompted chatter about a new bull market in the base metals, and according to legendary resource investor Rick Rule, the fun has only just begun. The last few years haven't been kind to mining companies in general, but sectors like nickel were hit hard. Majors like Glencore suffered through some rough years, and many juniors just faded away.
But now it would appear that those hard years are officially over, even if some traders still feel like this could be a massive head fake. There is every reason to think that the base metals could be entering a new bull market, with huge demand meeting supply that isn't going to be sufficient for all emerging technologies under development.
It is important to realize that the next generation of infrastructure will be radically different than what we have now, and as sustainable electrical generation becomes more widespread, metals like copper and nickel will be needed in quantities we may not currently grasp. China is a huge player in this arena, and as they demonstrated with solar cell manufacturing, they are able to make a massive impact on world supply dynamics once they get started.
New Ideas Are Taking Hold
While many people suggested that China would continue to use coal as their primary power source for decades to come, it would appear that they are making some big changes. The build out of solar power in China is reaching levels that would have seemed absurd a decade ago, and they are also planning to make a big shift away from petrol powered autos. It is important to note that an electrical vehicle (EV) uses four times more copper than a gas burner, so if and when China goes 100% EV the amount of copper needed will skyrocket.
As Gianni Kovacevic has pointed out, nearly half of the world's copper comes from around 15 mines, and there is significant risk of a supply shock at any time. Freeport McMoRan's Grasberg mine in Indonesia is an example of this, but the problems in Chile with labor and loading also serve to illustrate to problem that industry is facing. There are of course great copper projects to finance, like CopperBank's Pinnacle project in Alaska, among others.
It all comes down to how the world is going to meed the demand for a radically new infrastructure, with sustainable electricity taking the place of fossil fuel powered machines. This may be one of the reasons why Rick Rule is so bullish on the base metals, but with his extensive knowledge of the world economy, there are sure to be others as well.
New Investments Are Needed
If we really are at the beginning of a new bull run in the base metals, there are opportunities to be had. But investing in mining companies isn't like buying the metals, and there is significant due diligence required before capital is invested. If you are wondering where your money could go to work, the upcoming Silver and Gold Summit in San Francisco is a great place to be.
In addition to Rick Rule, investors like Doug Casey, Jim Rickards, Marin Katusa and Frank Holmes will be sharing their views on where the economy is going. The Summit will happen over November 20th and 21st, and there are still spaces available if you would like to attend. It would be difficult to think of a better place to learn about investing in resources, and we are thrilled to hear from all the accomplished presenters!