AI Will Boil The Oceans, And The Element Is Copper
作者：Clem Chambers
copper ore, macro photography, ore extraction mine, metal used in the production of conductive material
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There wasn’t going to be enough copper even before AI. The expected demands for copper from the electrification of future technologies was already going to overwhelm supply, long before the AI revolution kicked off when ChatGPT became mainstream.
Now, the demand for copper is entering an entirely new level – and the market doesn’t seem to have caught on, at least if you look at the copper chart.
It’s ironic that the price slumped when tariffs on copper were rolled back. The tariffs were removed back because the U.S. desperately needs copper, and much like the waiving of Russian sanctions on platinum group metals, the rationale is clear: in the new reality, when metals are strategic, they are too critical to be obstructed.
The price slump caused by the scarcity of copper – when there isn’t enough to manipulate its price – is counterintuitive, to say the least.
The copper chart - it's slumped but the long-term prospects are good
Credit: ADVFN
The long term investment thesis, however, is straightforward: there is not enough copper to match a substantial uptick in demand, and its price will rise as a result.
Investing in copper, though, isn’t simple. Buying physical copper in large quantities is impractical, and futures contracts are inherently risky.
There are copper ETFs:
- United States Copper Index Fund (CPER) – tracks copper futures traded on COMEX.
- iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC) – provides direct exposure to copper futures.
The Copper miners ETF are:
- Global X Copper Miners ETF (COPX) – holds a basket of copper miners, including Freeport-McMoRan, Southern Copper, and Lundin Mining.
- iShares MSCI Global Metals & Mining Producers ETF (PICK) – broad mining exposure with significant copper holdings.
- SPDR S&P Metals & Mining ETF (XME) – diversified U.S. mining stocks with heavy copper exposure.
That gives investors a fairly broad range to choose from, but if you want blue-chip, pure-play mining, the options are limited. Narrowing the focus to major producers, one quickly finds the field restricted to Antofagasta and Freeport-McMoRan (both of which I hold). Yes, many other companies have copper exposure, including secondary and exploration plays, but large, stable, pure-copper options are rare.
This brings us to Anglo American, which I’ve recently bought. They are merging with Teck in Canada to create a copper juggernaut in a $50 billion deal. To me, this signals a clear message from the boards: get long copper. If it’s worth combining $50 billion of companies to capitalize on copper, why wouldn’t you follow the ultimate insiders?
The key takeaway for the future is that there will be infinite demand for energy because AI itself has insatiable energy requirements for processing and cooling – and it also needs massive amounts of copper. This is a bold claim, but perhaps not as bold as Elon Musk’s statement that AI could eventually consume all the energy of our sun, and then the energy of the galaxy.
You can see him make this claim in my YouTube video from last week.
When the person with arguably the most AI on Earth – who lands rockets backwards from space on floating drone barges – says this, you might temper his opinion. But even if he’s only 1% correct, humanity is going to need vast amounts of copper. Anyone skeptical of Musk’s point is being brave, because even partial consideration reveals a new dynamic. The world is shifting from tactical to fundamentally strategic, creating a host of new opportunities.
Copper doesn’t grow on trees, and mines take years to come online. Meanwhile, Silicon Valley and governments are planning to blanket the globe with server centers – and, figuratively, to boil the oceans.
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