I have been invited to deliver a follow-up keynote to a group of electrical cable manufacturers on November 5th. The first keynote was July 2017 where I gave a colourful A-Z on the energy pivot – it was well received – and the important take-away for me personally, as a Jr. Copper Speculator – these buyers/fabricators of Copper have ZERO interest in high Copper prices, obviously. Do they enjoy the participation of speculators who assist in tempering the price of Copper? 

You likely don’t need a graph to deceiver where investor sentiment sits with respect to the red metal. What you may not know, is that sentiment, according to COMEX, has been near zero since the 1st tariffs were implemented June 2018 – and sentiment the last few months has persisted at absolute zero! 

As for managed money speculating on Copper, their collective bearish positioning is at all-time highs (meaning most amount of bets against Copper.) View this chart in more detail and imagine what happens when the speculators decide to go long – which they eventually will, due to overwhelming fundamentals that point to a Copper supply deficit irrespective of the short/medium/long term outcome of the China/US trade war. Like every other time before it, the 10s of thousands of real end users start to scramble – the price goes much higher. How can copper go from $2/lb to $3.30/lb in 2016/2017? Hint: it’s not the miners.

There is pressure on both sides of the trade war to have a face saving truce.  A friend of mine has been sending me snippets of news letter writer gold the past weeks. Here are a couple from The Gartman Letter that I recently posted to Twitter. Did you know, in 2014 the US exported $24 Billion of agricultural products to China? First half of 2019 only $1.3 Billion! Farmers vote, and Republicans know that, especially in those all-too-important 4 or 5 must win electoral college States.

Here is a letter from a US farmer who’s family has been growing things for 150 years. Question, where is the largest consumer market for any US farmer? China, of course. The wisdom in this comment is brilliant.  Imagine putting tariffs on steel to save some 1,000s of jobs. Or, why not import whatever cheap steel and create Millions of high quality jobs with their cheap, even if so dumped steel? 

One can almost smell a face saving truce coming to a news headline near you.  The October face to face meetings? With a truce, Copper should spike to new multi-year highs. 

Happy investing.

Gianni