August 12, 2021
We already know, from reading the monthly ISM reports, that manufacturing business is booming. But they are dealing with record long lead times on raw materials, due to shorages. And the price of commodity inputs are ALL going in one direction — UP.
With the fresh demand of a massive government funded infrastructure plan coming, the supply problems will only get worse, not better. That means higher prices.
Let's take a look at some charts …
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Above is copper, a commodity known to be an early indicator of economic turning points – among the most widely used metals. And as we've discussed, with the global initiative behind electric vehicles, battery electric vehicles use 183 pounds of copper — 4 to 5 times the amount of copper in conventional vehicles.
Copper is 11% off of the highs, and trading into technical support of this big trendline. We should expect new higher, highs to come. Here's a look at aluminum … |
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As you can see in the chart, aluminum prices have soared off of the pandemic-induced lows, but remain south of record levels. Expect new record high prices to come.
Two ways to get leveraged exposure to a continued rise in these key base metals: Alcoa, the largest U.S. aluminum producer … and Freeport McMoran, the largest U.S. copper producer (disclosure: we own FCX in our Billionaire's Portfolio). |