• Bank of America: Copper supply crisis now here
• Analysts expect prices to continue rising
• Identified promising investments in the gold and copper sectors
The price of gold has achieved one record high after another in the last few weeks and the price of silver is also getting carried away by the gold rally. In addition to the two classic precious metals gold and silver, according to the metal strategists at Bank of America (BofA), investors should not ignore another metal: copper.
Copper price rises – BofA: Copper supply crisis has arrived
The price of copper has already increased by over 10 percent this year. A ton of copper currently costs around 9,333.05 US dollars (as of April 12, 2024). This could be because the previously predicted copper supply crisis has now arrived, according to Bank of America strategists, MarketWatch reports. This is driven by a scarce supply of copper in combination with the increasing demand for copper, among other things, for power cables, electric cars, wind turbines and solar parks, which are increasingly being relied upon as part of the energy transition. According to Bank of America, copper is “at the epicenter of the energy transition,” reports CNBC. That’s why “the lack of growth in mine supply is clearly noticeable.”
“Scarce availability of concentrates is increasingly limiting production at China’s smelters and refineries, potentially pushing refined metal consumers back to international markets,” Bank of America analysts said, according to CNBC. “At the same time, demand in the US and Europe is expected to pick up again as economies bottom out; this, combined with rising demand due to the energy transition, is likely to push the copper market into deficit this year,” they added .
“The much-discussed lack of mining projects is increasingly becoming a problem for copper. Together with investments in green technologies and a recovery in the global economy, this is expected to push prices up to US$10,250/t (465c/lb) by the fourth quarter “MarketWatch quotes Bank of America metals strategists led by Michael Widmer.
Citi analysts also expect copper prices to rise
Citi analysts also expect copper prices to continue rising in the coming months and have already warned consumers of the metal in advance, advising them to “urgently hedge” or risk cost increases of $320 over the next three years billions of US dollars, reports MarketWatch. They said in a note last week that they believe copper’s second secular bull market of this century is now underway.
In their base scenario, Citi experts expect copper prices to average $10,000 per ton by the end of the year and rise to $12,000 in 2026, reports CNBC. “Our base case of $12,000 per ton assumes that cyclical demand growth increases only slightly over 2025 and 2026,” the analysts said. However, the price increase could also be more significant, according to Citi: “Explosive price increases are also possible over the next two to three years if a strong cyclical recovery occurs at any point, with prices potentially increasing by more than two in our bull case scenario A third could rise to more than $15,000 per ton,” CNBC reports the experts.
Bank of America analysts also bullish on gold and silver
Meanwhile, analysts at Bank of America also remain optimistic for gold and silver. “Gold remains one of our favorite metals and we expect prices to average $2,500 per ounce by the fourth quarter and potentially reach $3,000 per ounce by 2025. In particular, demand from the “If western investors also come to the party due to interest rate cuts, the yellow metal will rise a step further; this may also be necessary if sentiment in China improves and less investment flows into gold,” MarketWatch quotes Michael Widmer’s team.
Analysts also commented positively on silver. They believe the metal should benefit from lower interest rates and outperform gold as industrial demand picks up and photovoltaic manufacturers shift to panels that require more of the precious metal.
BofA identifies promising investments in the gold and copper sectors
As Investing.com reports, Bank of America analysts have also identified some stocks that could benefit from a rise in gold and copper prices.
For example, the analysts see a clear price potential of around 38 percent for the Canadian mining company Agnico Eagle Mines with their price target of 85 US dollars – after a price increase of 12.03 percent on the NYSE since the beginning of the year – and reiterated their buy recommendation. They also upgraded Freeport-McMoRan to “Buy” and expect the US mining company’s shares to rise by around 16 percent. This year, the share on the NYSE has already increased by 16.21 percent (as of: closing prices on April 12, 2024).
According to BofA analysts, other promising investments in the gold and copper sector include the Canadian-based multinational gold producer Alamos Gold, whose shares have already gained 12.91 percent on the NYSE this year, and the Canadian mining company HudBay Minerals, which specializes in copper. whose shares on the NYSE have increased by 38.04 percent since the beginning of the year (as of: closing prices on April 12, 2024).
Editorial team finanzen.ch
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