Bull markets always start slowly and quietly and carefully - away from the maddening crowd who have their eyes and investment dollars on other assets classes that are usually overvalued and wildly overpriced.
So as contrarian investors, we know that we must seek the undervalued, the forgotten, and even the hated assets that have - slowly but surely - the potential catalysts needed to turn around and begin a new bull market.
And when a new bull market does start in a sector or commodity, we still have to remember that what happened in a previous bull market will not necessarily play out in exactly the same way this time around.
So this bring us to the potential for a new bull market in Copper.
To help guide us, we can turn to two investors in the copper and energy space who have already begun to position themselves for even higher Copper prices over the next few years.
Back in January we talked to Gianni Kovacevic about the worlds energy needs and how this demand will require an enormous amount of Copper over the next decade.
And even though electric cars are gaining more mainstream attention today and are perhaps on their way to full mainstream adoption within the next couple of decades, it is still perhaps the untold story of vehicles that have yet to become electric that provide an even more compelling case for a bull market in Copper.
It is estimated that buses, trucks, and utility vehicles are still yet to begin their huge transformation within the electric vehicle space.
So when a combination of new demands begin to arrive for a commodity such as Copper, with the backdrop of no new major copper deposits coming online in the near future - as well as those deposits becoming harder and more expensive to find and develop in the first place - the real interest in Copper related assets will start to gain attention from mainstream investors and media alike.
And as always, once the price of Copper or any other commodity begins to make a meaningful climb, other investors will start to notice, and opportunities will become more expensive.
Gianni mentions in our interview that for the Copper market in general - it is not yet a page one story - but rather a page 16 story.
And so for contrarian investors who have the patience and discipline to wait for Copper to head towards page one - it’s likely that the gains from well capitalised resource companies in the future will perhaps provide today’s investors a great return.
Another guest we’ve recently had on the show, Anthony Milewski, gave us an update on where he thinks Copper is going and an overview as to why it will continue to exceed all time highs in this new resource cycle.
Like Gianni, he feels that the new drivers behind higher Copper prices will include the rise of electric vehicles and all the infrastructure that will be associated with energy storage going forward.
And again, this shows us that when a new demand story appears because of a new shift or development within a new technology - namely electric vehicles - the underlying commodity will benefit greatly and early investors who connect the supply and demand dots will do very well in the future.
Ultimately, we need to buy assets or commodities that are hated or misunderstood in the short term - but are needed in the long term - so we can ride a new wave in that particular commodity or stock.
We want to be positioned before the mainstream arrives and sees what we see - even if we are a few years early.
Until next time, happy contrarian investing.
The Palisade team
View disclaimer here.