Deposits holding the winning trifecta... copper, gold, silver

Geologist James Cooper explains why copper, gold, silver porphyries will become the ideal assets to own in a commodity supercycle set-up
James Cooper

Fat Tail Investment Research

As you may know, copper, gold and silver have been on a tear lately.

Here’s the latest Year to Date performance for these three commodities:

Source: ProRealTime
Source: ProRealTime

This broad lift across different commodity classes (precious and base metals) is creating an air of ‘commodity super cycle’ within mining circles.

Rumblings of the 2003 to 2011 upswing years are starting to stir.

Back then, everything swelled—from rare earths to iron ore to wheat. The list of commodities that experienced exponential rises in value over that time is extensive.

That includes high-profile commodities like gold. Back in 2003, it sold for just US$360/ounce.

By the end of the boom years in 2011, it had surged 400% reaching a high of more than US$1,900/ ounce.

And just like today, copper followed in gold’s wake.

Despite having different demand drivers, the last commodity boom witnessed a 528% gain for copper.

It went from a low of US$0.70/pound to a peak of more than $4.40/pound by 2011.

So, are gold, copper and silver prices signalling something big in 2024?

Last year, S&P Global wrote:

 ‘The world isn’t in a commodity super cycle yet, but it should be.’

That was based on strong, broad demand for commodities and poor supply outlooks as companies and investors dismissed project developments based on extreme capex demands.

Add permitting delays and a lack of discoveries, and this coming boom could be as much of a demand story as it is about supply.

So, what’s the angle here for investors?

Ideally, you should focus on high-quality geological assets with a multi-decade-worth mine supply.

Ideally, companies entering maidan production within one to two years should be targeted to capitalise on higher metal prices.

But there is one class of deposit that should sit high on investors’ watchlists…

Porphyries… Deposits Perfectly Positioned for a Commodity Supercycle

Investing in companies that can push beyond junior mining status means they must own or have the potential to find enormous deposits.

That’s why companies exploring or developing deposits known as porphyries could benefit enormously.

These are the world’s largest storehouses for copper.

Escondida, the world’s biggest, began production in the late 1990s, and the deposit has an enviable 40-year mine life.

But there is another key feature positioning these deposits for potential outsized gains in the years ahead… porphyries are often endowed with gold and silver.

Given the unfolding trend in 2024, gold, silver and copper motherlodes could become the winning trifecta if a commodity supercycle plays out.

Common along the west coast of South and North America, dense oceanic plates collide and subduct below the continental crust.

This slow-motion collision compresses the crust, forming a long north-south chain of mountains from Patagonia to Alaska.

But this subduction zone also gives birth to gigantic porphyry deposits; where rich mineralised fluids combine with plumes of rising magmatic rock.

Source: Science Direct
Source: Science Direct

While gold and silver are typically considered ‘by-products’ at these mines, the quantity can sometimes exceed the total ounces at a standalone precious metal mine.

For example, one of the world’s largest developments, Argentina’s Filo Del Sol project holds a ‘byproduct’ totalling 4.6 million ounces of gold.

That would be an enormous gold mine in its own right.

Yet the primary focus here is copper… The deposit holds a resource of 3.2 billion pounds plus almost 160 million ounces of silver.

Assets like this sit high among the majors as potential takeover targets.

This is another bonus for those investors looking at these porphyry hunters.

The mood for commodities is lifting, but are we in a SUPERCYCLE?

Copper is a clear bellwether for the broader strength of the commodity market.

That’s why investors should watch the copper market to find clues of a budding super-cycle in the making.

With the recent strength in 2024, copper has just begun testing an important resistance level…

The January 2023 high at around US$4.26 per pound, see below:

Source: Trading Economics
Source: Trading Economics

This is a critical juncture for the copper market, and the resource sector broadly.

If the metal can break through this level, copper may rapidly move to its next major level, around US$4.80 per pound.

This would be a retesting of its all-time highs from early 2022.

Copper still has two major hurdles to overcome.

But if copper follows gold’s lead and breaks into all-time new highs in 2024, this would signal the dawn of a new commodity supercycle.

And we may be far closer to this outcome than most would care to believe.

The coming weeks will be critical.  Copper remains the key metal to watch.

Positioning ahead of this outcome

The resource market is notorious for doing very little for years and then exploding rapidly with little warning.

As famous mining legend Rick Rule would say:

‘Commodity bull markets move a little, at first, then all at once!’

What we’re seeing right now could be the ‘little’ phase. It may pay to start preparing now if we enter the ‘all at once’ phase.

How can you capitalise on the potential commodity boom ahead?

Remain selective; focus on companies with high-quality geological assets. That includes porphyry deposits.

This market still has plenty of value, especially at the junior end. But as I’ve shown you, this could change very quickly.

If you found this discussion on the nickel market insightful, you’ll appreciate the free daily insights from Fat Tail Daily. Dive into our analysis and get ahead of the curve. Sign up here to cut through the noise.

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

James Cooper
Commodities Analyst and Editor
Fat Tail Investment Research

James is a former exploration geologist, turned mining analyst with postgraduate qualifications and has extensive operational and financial experience in the mining industry. He’s worked for major and junior companies throughout Australia and...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment