Metals continue to perform! In recent weeks, I have spoken about the breakouts on the gold and silver markets. The precious metals have been taking the spotlight, but copper is now making its way around the mainstream financial media headlines. And a certain billionaire is the reason why!

Before I jump into the fundamentals, let’s take a look at the charts!

 

The metals continue to ramp. Platinum and copper are making moves, while gold and silver have retraced a bit, but look pretty good in terms of another leg higher to test recent highs. Palladium has yet to join in on the metal pop.

Starting with the monthly chart of copper, we are set to form a major close. Currently, the candle body is showing a breakout above the $4.72 zone. This is where record candle body closes were formed in 2022. Copper is looking extremely bullish. We could very well be making a run to test all time record highs this week.

The weekly chart is also showing a break and a move towards the major resistance just above $5.00. The weekly close by end of this week Friday will tell us whether copper is ready for an incredible rally next week, or if we fail to confirm a weekly close, perhaps a bit of retracement before continuing higher.

On an intraday chart, we clearly see the current higher low at $4.78. Meaning the uptrend on the intraday remains intact as long as copper stays above this price level. After a very strong bullish day, we have just printed our first red candle for the day. Profits are being taken near the major $5.00 zone.

Copper prices are already pushing up against record highs. The commodity is up about 18% year-to-date, trading at $4.68 per pound, which is just slightly below its all-time high of $5.04 reached in March 2022.

 

So why the move higher in copper?

First off, just some things to think about. But before I reveal some thoughts, I highly suggest checking out my “Copper Investing for Millennials” article I wrote a couple of years ago for a deeper dive into fundamentals. Most of that has come true, and still applies for future catalysts.

Copper is known as ‘Dr. Copper’ as the price is used to gauge the health of the global economy. Copper prices have moved a lot in the past due to Chinese demand, but since copper is used in infrastructure, if prices are rising, it tends to indicate that demand is rising due to building projects and hence, the global economy is doing well. If copper prices tank, it means the opposite. Countries are not building projects which means a slowdown in economic activity.

So is copper rising on Chinese demand? Just a few days ago, China did announce a 1 trillion yuan stimulus package to get the economy going. Some analysts and traders are saying that this strong signal of economic support is what is driving copper prices higher.

Another thing to note is the idea of a ‘soft landing’. This is key given the current market narrative surrounding inflation and interest rates. The markets believe that rates will be cut this year and the Fed has succeeded in taming inflation without causing a recession. The R word is key here given copper’s nomenclature of Dr. Copper.

Or maybe there is just a general commodity boom. Perhaps on fears of rising inflation hence a move to hard assets. We are seeing many of the metals climb as can be seen with the chart above.

The latter is something I am paying attention to. Others are stating metals are simply rising on rate cut expectations and the drop in the dollar:

 

But billionaire investor Stanley Druckenmiller had things to say about copper… and it was about simple supply and demand outlook. An outlook that many copper bulls at mining conferences have been stating.

On CNBC, the billionaire investor had this to say on investing in copper:

“Copper is a pretty simple story, takes about 12 years, greenfield to produce copper, and you got EVs, the grid, data centers, and believe it or not munitions. These missiles all got enough copper in them and the world’s getting hot that we just think the supply-demand situation is incredible for the next five or six years,” 

I’ll be honest, I did not even think of the military industrial complex side of things, but Druckenmiller raises a strong point. The US recently approved a $95 billion military aid package for Ukraine, Israel and Taiwan. Building weapons and munitions could be a bullish catalyst for other metals too.

Druckenmiller actually mentioned a potential investment in copper last year at the Sohn Investment Conference, stating copper was “in the tightest position, well frankly I’ve ever studied.”

“Given the move toward EVs, given the usefulness of it in infrastructure spending, it’s hard to believe copper won’t be a huge beneficiary. The question is when am I supposed to buy it and how big is the exposure?”

Druckenmiller did not fully commit to copper at that time due to concerns about the Fed not being able to provide the ‘soft landing’ for the economy.

But times have changed. Druckenmiller’s Q4 13F filing revealed a $20 million position in copper miner Freeport-McMoran. His Q1 13F filing is set to be released this week which will reveal whether he’s gotten even more bullish on copper.

 

The chart above is the COPX global copper miners ETF. Big money will play Freeport-McMoran, but I am keeping an eye on this ETF. I had to zoom out to the monthly time frame in order to show the key support and resistance levels.

Breakout is in play. I say this because the weekly time frame candle shows a breakout and a successful retest. Previous record highs are the target level.