Copper has risen above $ 9,000 a ton in the past few hours for the first time in nine years, taking another step towards an all-time high set in 2011 as investors bet the supply shortage will increase as the market picks up. world from the pandemic. Copper is growing within a broad commodity rally ranging from iron ore to nickel, while oil has gained more than 20% this year.
The leading industrial metal, copper, is supported by limited stocks of metal, the prospects for a recovery in economic growth and the expectation that a long period of low inflation may end in the most advanced economies. Investors are hoarding copper on the bet that demand will increase in the coming years as governments launch unprecedented stimulus programs targeting renewable energy and electric vehicle infrastructure, which will require huge volumes of raw material.
“The list of bullish factors for copper is extremely long,” wrote Max Layton, head of commodities research at Citigroup. “Much of the rise in copper will occur in the next few months, and so we think it will hit $ 10,000 sooner or later.” According to Lorenzo Batacchi, portfolio manager of Bper and member of Assiom Forex, “the commodity markets have already anticipated much of the real economy, there is less supply than demand and at this moment a bottleneck is being created. forming a bubble
As long as there is limited supply I would not see big problems, once the economy reopens we will see developments “.
Until 2020, adds Batacchi, “the copper-gold ratio and T bond went synchronous, from September onwards there was a great rally in the metal. If now the Treasury were to recover what the two commodities did, it would start to become a problem for equity. We will see sales on the price lists. ”
With inflation expectations already rising around the world, the strong rally in commodities, including copper, may soon begin to emerge in the value of finished goods, driving costs up for governments with large infrastructure spending plans. The risk of faster inflation triggered a massive sale of bonds globally, with the 10-year US Treasury yield leaping to a roughly one-year high yesterday at 1.38%. The gap between the 5 and 30-year curves reached its highest point since October 2014 on signs of strength thanks to the reflation policy (strong stimulus of the economy through an increase, for example, in the money supply).
This leap in commodities can be captured on the stock exchange
One of the simplest ways is to buy the Etc, or passive funds specialized in commodities, traded on Piazza Affari and which are quoted in euros (but the underlying is always in dollars). From the beginning of 2020 to February 18, the funds that recorded the greatest increases are related to oil. Beware, however, that they are leveraged even 3 times. These are WisdomTree Crude 3x daily (+ 102%), WisdomTree Brent Crude 3x (87.17%), followed by WisdomTree Natural Gas 3x (81.74%), then Societe Generale Etc Gas 3x (80.52%) and again SocGen Wti Oil (63.59%).
The other commodities that recorded double-digit performance are linked to the funds WisdomTree Nickel 3x (+ 43.17%), WisdomTree Sugar 3x (40.36%), WisdomTree Corn 2x (38.89%), WisdomTree Platinum 2x (38.70%). WisdomTre Copper 3x posted a 30.94% rise. When the Etc are not leveraged, the yield is always high but more contained.
The best performance, in this case, is by Societe Generale Oil Collateralize (+ 29.6%), followed by WisdomTree Wti Crude (+ 28.75%). The funds of other operators such as Lyxor, iShares, Hsbc, Amundi are placed in the middle range of returns. Those who have lost the most, however, over the last twelve months are the Etc linked to oil and natural gas, always in lever 3, which have left on the ground (they are always from WisdomTree and SocGen) up to 59%. (All rights reserved)
