Tag Archives: Copper

February Commentary

In February, our net weighted average return in was +2.67%. Our net average return for the month by strategy:

  • Conservative: +0.54%;
  • Balanced: +2.53%
  • Growth: +4.34%.

Since 2015, we have generated a net weighted average return of +61.10%.

In last month’s commentary we spoke about how an increase in vaccinations, economic reflation and fiscal spending by major economies are having a positive impact on markets. These trends continued to gather strength in February. Although there is still trepidation about current and future virus mutations, countries that have been leaders in vaccination numbers are showing lower transmission rates and lower fatalities. These are very good things for the continued global recovery.

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Strategy 2025

The best way to predict your future is to create it.

  • Abraham Lincoln

Our mission is to safeguard the future financial prosperity of our clients. While many find comfort in what may have worked in the past, we know that our goals can only be achieved by boldly looking into the future. As such, we are completely focused on finding investment opportunities that offer compelling upside convexity, while managing downside risk. Our purpose is not to time markets, but to identify ascendant industries and best-of-class companies and have the patience to reap substantial rewards.   

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What’s Better Than Bitcoin? Companies That Dig Rocks (Seriously!)

We get a lot of questions about cryptocurrencies. Especially when there is upwards price movement. No one ever seems to ask about them when they are not performing so well… I always answer, that I cannot buy cryptocurrencies for clients, and that we are fully committed to finding profitable opportunities elsewhere.

One example is our investment in copper miners. Copper miners?!? Yes, copper miners.

Since the lows of March 16th, copper miners Freeport McMoRan and HudBay Minerals have actually outperformed Bitcoin:

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Because You Know I’m All About That Base, ‘Bout That Base, Base Metals…

People tend to get preoccupied with things that are shiny. Investors often fall prey to the same instinct – especially those that are obsessed with gold. Such people are often referred to as ‘Gold Bugs’.

This years, Gold Bugs have been excited to point out that gold has outperformed the S&P 500 index year-to-date:

Congratulations! However, there is a far more interesting metals trade going on at the moment: base metals.

After a slow start to the year, base metals such as copper (sometimes referred to as “Dr.Copper”), zinc, and nickel have seen their prices appreciate significantly:

One way that Gold Bugs like to play movements in the price of gold is to trade the VanEck Vectors Junior Gold Miners ETF (GDXJ US). This ETF holds a basket of speculative gold mining companies and currently has around $4.4 billion USD in assets. In comparison, the Global X Copper Miners ETF (COPX US) only has around $53 million USD in assets. It stands to reason that given this disparity in investor interest, copper/base metals miners are hardly on the radar of most retail investors. However, the YTD performance of base metal miners has been phenomenal:

Another reason why base metals miners do not attract a lot of attention is due to the fact that they carry such a small weighting on major US stock indices.

For instance, there is no longer a single mining company in the Dow Jones Industrial index. Moreover, the S&P 500 Index only has one base metals miner: Freeport-McMoRan Inc. (FCX US). It has a 0.1% weighting. Therefore, for US money managers, the mining sector barely registers in terms of being potentially overweight or underweight versus your benchmark.

Speaking of benchmarks, the escalating supremacy of low cost index ETFs is forcing institutional money managers to differentiate themselves and seek out investments that do not just track their benchmarks. Base metal mining companies look like an excellent place to start…

Here’s a link to our post on May 31st where in the last paragraph we mentioned that we were delving into material stocks:
LINK: We Have Been Busy

Tune in next week when we will delve deeper into why base metals and base metals miners have been performing so well..

P.S. my apologies if you know the song that I referenced in the title of this post. I really hope that it is not playing in your head right now… Sorry. read more