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Editor’s Note: Today we are bringing you a guest editorial from Matt Badiali, founder of Mangrove Investors. We think you’ll be interested in what he has to say about the future of the precious metals market. Enjoy your Labor Day; we’ll be back tomorrow with more market insights.
There are times in the market when I can sympathize with Kassandra.
If you don’t know your classics, the god Apollo cursed her to tell true prophesies that no one would ever believe.
And this is my Kassandra moment. There is a massive bull market in energy coming. It’s not in oil or coal. Those price moves are short term. This will be in something altogether different.
And the numbers are staggering.
To understand what’s coming, you have to understand the evolution of palladium. Because the palladium price is the road map for what’s coming. Let me show you…
Palladium was always the “little brother” of platinum.
Platinum is half industrial metal and half precious metal. Platinum jewelry was all the rage in the 1990s. And the price of platinum vied with gold for the most expensive ounce.
However, palladium prices languished. As platinum grew popular, palladium became its substitute. And it has a lot of uses.
The metal acts as a catalyst, which means it makes chemical reactions more efficient. Palladium is the critical part of a car’s catalytic converter. In technology, it is used to coat electrodes of capacitors in laptops and cell phones. It also combines with hydrogen to form a stable palladium hydride. That allows hydrogen storage without the risk of explosions.
This incredibly useful metal was as cheap as $90 per ounce in 2003. It exceeded $2,900 per ounce in 2021:
That’s a more than 3,100% increase in price. Every $1,000 worth of palladium is now worth $31,200! It’s an incredible move in the price of a metal. It happened because the world needed palladium and there wasn’t enough supply to go around.
That’s about to happen to another metal… copper.
And that’s why I feel like Kassandra. I keep telling people and they don’t listen. The supply and demand data are evident. You can’t build the electric cars, windmills, and solar farms projected without a lot more copper.
There is no way we can meet the demands for electrification without the price of copper going much higher. All we have to do is look at palladium to see the road map for what’s coming.
The problem for investors is finding great copper assets.
The major, legacy producers are mostly awful businesses. They carry massive liabilities in the form of debt and aging mines. And new projects are often simply old, uneconomic projects with new names, under new companies.
That’s why Mangrove Investor launched our New Energy service.
We apply 17 years of industry experience to find the best companies in the changing world of energy. It’s not just the best copper projects. We found a sand company whose product is so pure that it can become the highest-quality solar glass… the first of its kind in North America. We also feature a company that takes the royalty business model into alternative energy.
We recognize that New Energy isn’t for everyone. The companies are small. Our holding periods are longer than a year. And the companies are inherently risky.
But we also believe that the risks are more than offset by the potential rewards. And if the copper price behaves like palladium did, this will be the sector to own for the next decade. Learn more here.