Copper has the ability to predict turning points in the global economy because of copper's widespread applications in most sectors of the economy — from homes and factories to electronics and power generation and transmission — demand for copper is often viewed as a reliable leading indicator of economic health. This demand is reflected in the market price of copper.

Earlier this year, industry specialists and analysts had forecasted that copper is arguably the tightest commodity. No matter what technology you use, you're gonna be using electricity and the only thing that can conduct electricity given the rules around the periodic table and the rules of chemistry is copper at the rate we need to conduct it, which means that the demand for copper gonna be there.

Not only is copper going to be incredibly tight, but it's also absolutely essential if we're going to electrify everything and move more energy use off of oil.

Source: iSquare LME Warehouses Inventory


However, the price of copper has been consolidating since 2021 and the inventory level of copper in LME warehouses is starting to increase. In the near term, it could mean that a recession is near. But if we look at this situation from a longer perspective, are we too optimistic to electrify everything and fossil fuel is going to stay for a longer period?

If that happens, our investment thesis should change drastically.