Transcription
Copper prices are exploding, and this is just the beginning. Billionaire Robert Friendlin, the founder of Ivanho Mines, is betting his life savings on it. He just secured a $500 million investment from Qatar's sovereign wealth fund. Saudi Arabia is investing as well.
Folks, we are in the early stages of a historic run in copper because it's not speculation that's driving prices higher. It is demand. Record demand that is growing every day. Pair that with a global shortage of 10 million tons annually, and the price has nowhere to go but up.
Now, if you're a longtime viewer of the channel, you are making a lot of money right now. Those who took my advice bought silver at $42, gold at $2,200, even palladium before its big run. But if you missed out, don't worry. This opportunity is even bigger. Today, I'm going to show you three ways to profit from the coming copper boom. Everything from a $7 copper mining stock to futures contracts where you can buy 25,000 pounds at a time.
But first, I want you to hear it straight from the source. This is billionaire Robert Friendlin speaking at the Energy Business Summit. Listen to this.
"To maintain global 3% GDP growth, we have to mine the same amount of copper in the next 18 years as we mined in the last 10,000 years. In the next 18 years, I've got to mine the same amount of copper as we mined in the last 10,000 years without electrification, without data centers, without solar and wind and the greening of the world economy. You people have no idea whatsoever what we're facing."
Produce in the next 18 years the same amount of copper we have mined over the last 10,000 years combined. That is the level of demand we're up against.
But he's not finished. "Copper right now, we're expecting that to be a $270 billion year market by tomorrow morning. And where's this metal going to come from? There's no copper inventory at all." So, supply, he's saying, is almost non-existent. While at the same time, demand is off the charts, folks. This is basic supply and demand. When everybody wants something and there's not a lot of it, the price goes up.
Here he is speaking at last year's Future Minerals Forum. And this will blow your mind.
"Everybody, if 20% of the American public had an electric car today and came home at 5:00 after work and plugged in that electric car, the entire grid would just roll over and die. The grid's not just not available for that."
Okay, so this is obviously not good. The US, along with the rest of the world, needs to massively increase our copper production. So, what would that take?
"If you imagine six large mines, world-class mines coming on year every year till 2050. That's what's considered to be necessary for any rational attempt at an energy transition."
Okay, six mines a year. Now that sounds difficult, but it's doable, right? Wrong. The best, the most efficient, high-production mine in the world is the Kamoa-Kakula copper complex, owned by Ivanho Mines. And it took 30 years to bring it online. I don't think anyone understands the true scope and size of such an operation, but I want you to see for yourself. I'm going to just show you this movie about one mine. I showed it to you before, updated to give you an idea of what it took to build the best copper mine in the world, the greenest copper mine in the world, the highest-grade copper mine in the world, the most rapidly growing copper mine in the world. 30 years of our life to bring one of these mines on stream. The world needs six of these per year.
It's going to be hard to find anything that matches the mineral endowment in the Democratic Republic of the Congo. Yes, you heard that right. The Democratic Republic of the Congo. The best high-grade copper reserves left on Earth are located in a third-world nation in the middle of Africa. So, what has historically been one of the least productive areas in the world needs to transform into the most productive overnight. Look at what they need to build.
So, this is a little video on how they, uh, the the origins of this mine, but I want just go ahead and step forward a little bit. I want you to see how big this massive thing is. Okay, take a look at this. This is just phase one. You're going to see the full copper mine here momentarily. Look at the scope of these operations. While you're watching this, remember we need six of these every year to continue production until 2050 just to meet current demands. Folks, this is not an Amazon delivery facility. This is not a warehouse. This is a massive, world-class mining operation, and it was 30 years in the making. That's the scale of what we need.
Now, last week I laid out my entire macro thesis for why copper prices will go higher. I'll put a link to that video at the end. So, if you haven't already, be sure to watch that. But there are three main ways to invest in copper.
The first is just physical ownership. Buy it, store it, then sell it when it's worth a bunch more. The problem is copper is heavy, and it's $6 a pound. Even a $12,000 investment will get you a metric ton of the stuff, so you can't store it in your sock drawer.
The easier way is to buy copper mining stocks, the ones digging the stuff out of the ground. More demand means they'll be mining more of it. And as the price of copper goes up, so will their profits. My three favorite copper mining stocks are Freeport-McMoRan, ticker FCX, Southern Copper Corporation, ticker SCCO, and TGB Mines, ticker TGB. These can be bought at any brokerage account or IRA, whether you buy one share or a million.
But if you want to get real skin in the game, if you want to leverage it up a little bit, you'll want to buy copper futures contracts. You can get a big position in physical copper without having to store it and leverage your money as high as seven to one. Now, I'm going to buy a future contract here in just a moment so you can see how it works. But futures and the option to use high leverage can amplify both profits and losses. So, my disclaimer here, be sure to consult a financial professional before going down this road.
But here's how they work. Copper trades on the Chicago Mercantile Exchange under the symbol HG. One contract represents 25,000 pounds of copper. And what you are buying is future delivery of this commodity at today's prices. Now, I know what you're thinking. And no, I have no intention of taking delivery of 12 1/2 tons of copper. I will close out this trade before it gets anywhere near the delivery date.
But here's where that leverage comes in. Now, today copper trades at $6 per pound. The contract, as we said, is 25,000. So, 25,000 * $6 = $150,000 of copper. But here's the thing. I don't need $150,000 to buy it. Brokers set what's known as margin requirements that dictate how much cash you need in your account to buy and hold these contracts. At Interactive Brokers, that number is $22,300 bucks. That's what's known as the initial margin. How much cash you need to buy it. So, with $22,000, I can buy $150,000 of copper. That's seven to one leverage.
Now, and this is important, leverage cuts both ways. That's seven to one. If copper goes up 10% from $6 to $6.60, I will get a 70% return on my investment. That $22,000 will be worth $37,000 and change. But if copper prices go down 10%, I would lose 70% of my money. So, you want to be careful. But you don't have to max out your leverage like that. Just because you need $22,000 doesn't stop you from putting in much more. I wired $60,000 into my account this morning. I'm going to start with buying one contract. So, about two and a half to one leverage. Let's go ahead and do that.
So, this is my Interactive Brokers account, and I'm just going to search copper. The ticker symbol is HG for the futures. But notice if I put in copper over here to futures across the top, and HG is the copper futures. Now, MHG are the micro copper futures. It's a smaller contract. Talk about that one in a minute, but let's just go to the regular copper futures. Now, futures have multiple expirations. So, typically every month, maybe every quarter depending on the contract. And so, the HG, you notice over here, is the symbol for copper. And then the next letter is the month this expires. So, notice this last trading day column. So, it's kind of like options. They have an expiration in the future. Although instead of expiring, this is a delivery date. This is when it's going to get shipped to you if you don't close out the trade.
So, I've gone in here. I actually just Googled this and pulled it up on the CME website that shows each of the contracts, the volume, and open interest. So, I want to see over here, the right column, open interest. I want to see a decent amount of open interest, right? And just like options, if there's only three of them and you go to try to buy or sell, you have a liquidity issue. The spread's going to be very wide. So, I want one with a lot of liquidity. And again, you can close this out and roll it to a future month. But, um, the big money is on the March contract, and after that, the May, after that, the July, etc. So, I'm going to see which one we can buy here. Now, I'd like to buy the July, but I want to see the price. If the spread is too wide, otherwise I'll buy one of these months. Let's go back in here.
Now, there is no price for anything after March. Well, there is a November one here, but let me just see what happens if I try to buy the July contract. Let's start a buy order here. Uh, so here's the bid and the ask. Okay, it's not very big. Luckily, I'm only buying one of them to get started, so it's no big deal. So, $6.109 by $6.107. Okay. So, I'm going to go ahead and buy one of these. Here's my order ticket again. Buy order, right? Account, quantity one. I'm going to do this as a limit. Uh, 111. See if we can get in here. We'll split the difference. Okay.
Now, thought was going to happen. So, you need to request permission. And when you do that, you got permission to trade futures. It's going to open up this other account here. So, I'm going to put on my account, hit continue, go to my trading permissions. And again, this is just kind of what they have to do. Um, just trade futures all in North America. Continue. So, this is all the boring stuff, right? The disclosures. You got to make sure you know what you're doing. Type your name in. This is your digital signature. And the only reason they do this stuff is to cover their you know what. So, somebody doesn't come back later and go, "Futures? I don't even know what those are. I Why did you even let me trade those? I didn't know what I was doing. I'm down $50,000. I need my money back." back and they go, "Well, you read our, you read the disclosure. You read this. You signed it. You knew what you were doing."
All right. So, they're going to submit this. Um, that's submitted, and we just got to wait till it comes back. Sometimes you get it back the same day. Sometimes it could be a day or two. And when that goes through, we'll just come back and place this order. Look at that. I'd be up already if I had got filled there. Let's try this again.
Now, again, it's going to show the amount of the trade as the full dollar value of that. So, a futures contract for copper, 25,000 pounds, trade for six bucks. Do the math, around $150,000. Okay, now the commission, $2. No big deal. I'll eat that one. Okay, I might have to change my limit now. Hold on. See, it's creeping up on me. Let's put 11:25. Submit your buy order. Order filled. All right, I'm filled.
Now, notice it said there you don't have data for this. That's on me. I should have added futures data. Now I do. I can see the price, uh, in TradingView if I go in there. You know, I can get the data there. But, um, nonetheless, okay, so I'm filled now, right? I'm in this. Look at my position. One contract at $6.10 per pound on 25,000. Okay. Now, these other ones, these are these ones from some of these. How do I see on my positions portfolio? There it is. Okay. So, currently we're down $15 on our copper. All right. But we are long one futures contract. And this thing, I got the July contract, so it doesn't expire till then or doesn't have to get delivered till then. I am going to roll it. You do want to close this out because it's very rare. You'll probably get a broker call before this ever happens. But theoretically, if you bought a futures contract like I just did and you sat on it and you did not touch it, and July comes around and it's delivery date and you haven't sold it, you will get a call from the COMEX exchange that says, "Where would you like your 25,000 lbs of copper delivered?" Okay? So, be sure to close that trade out early. But again, it is January 26th as I'm recording this. It is not anywhere near that time. And by then, I should see either a pretty sizable gain, I'm hoping, or going to take some heat. I'll get out of this thing and take a small loss.
Okay, so that's three ways to buy copper: stocks, ETFs, and futures. I think every investor needs some exposure to metals, and for me, this is by far the biggest opportunity today. In a second, you'll see a link to last week's video where I do a deep dive on why copper is poised for a huge run. Be sure to watch that. And don't forget to subscribe to the channel. And if you haven't already signed up, my $5 YouTube special is still going on for my Black Ops trading service. So, click the link in the description or go to tradewithro.com. You get an entire year of live weekly mentoring sessions with me every Monday for an hour, another session on Thursdays, my top analyst, access to my indicators, weekly newsletter, picks, a ton more stuff. Again, no strings, just five bucks. So, click the link, go to tradewithrosts.com, subscribe to the channel, like the video if you would, and I'll see you in tomorrow's.