(Kitco News) Commodity supercycle or not, copper has one of the “most bullish cases” around, said Lobo Tiggre of The Independent Speculator.
No matter the general sentiment around commodities, the copper supply-side ensures price gains in the future.
“I like copper a lot. It is one of the most solid bull cases. And even if the commodity supercycle does roll over, I could see copper keep on going,” Tiggre told Michelle Makori, editor-in-chief of Kitco News.
And even though copper is no longer cheap at $4, it doesn’t mean the rally is over, he pointed out. “It takes ten years for [mines] to come online. And even once you line up the financing, the permits, and all that other stuff … it still takes five years for these big copper mines to come online.”
Copper is the sector where “high prices take a long time to cure high prices.” However, Tiggre advises investors to buy the metal on dips. “There will be volatility. I want to buy on the dips rather than the ups. And I’m going to use that to my advantage,” he said.
Also, copper is the metal to own for the long-term, Tiggre added. For short-term gains, he told investors to look at gold and silver.
“Long-term as an investor, I would say copper. If I want a more immediate pot, it will be in gold and silver. Silver is still relatively undervalued to gold, and that does give it upside in the next monetary scare and the safe-haven rush,” he said.
Tiggre is quite bullish on silver, stating that there has been a change in the investment thesis. “It seems pretty clear that the industrial side of silver is becoming more and more important, and that’s not necessarily bad because the industrial case is actually getting bigger. So that makes me more bullish, but it is something I think silver enthusiasts should recognize. The data is telling us that there’s a change happening in this marketplace,” he said.
Overall, Tiggre is in a stagflationary camp, warning to watch the current global energy shock while drawing parallels to the 1970s.
“We have persistent high inflation, and it’s not just the U.S., it’s global. The ’70s did happen. I’m not saying it has to be the same as the ’70s, but the ’70s did show that you can have a weak economy and high inflation,” Tiggre said. “You had the oil supply shock then. We’ve got an energy shock right now. You’ve got guns and butter back then. Now you’ve got fiscal spending and monetary policy that couldn’t be easier.”
And once the market, its participants, and most importantly, the algorithmic trades realize that inflation is not temporary, gold and silver will surge.
“This short-term belief that somehow inflation is bad for gold cannot last. I think that it just creates buying opportunities,” he added. “It’s not just what people think; it’s the traders and their algos. Their economic models need to be debunked. We’ve talked about the price of gold, but what we quote is not the price of gold. We cook the price of futures, contracts, and the people who trade those. [They] don’t contemplate that stagflation can exist at all. It’s not in the model.”
Once that debunking happens, gold and silver are going up, and it won’t be gradual, Tiggre stated. “At some point, they wake up and smell the financial napalm. I don’t think that can be very far off in the future. Gold has been responding more to the dollar. I think we go back to seeing it respond more directly to interest rates and CPI.”
Watch the video above to hear Tiggre’s take on the commodity supercycle and his bullish breakdown of uranium. Follow Michelle Makori on Twitter: @MichelleMakori.