WEBVTT - Jeff Currie on Why Copper Is His Highest-Conviction Trade Ever 0:00:02.440 --> 0:00:14.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:17.880 --> 0:00:21.919 Hello and welcome to another episode of the Odd Lads podcast. 0:00:21.960 --> 0:00:26.120 I'm Joe Wisenthal and I'm Tracy Alloway. Tracy Copper has 0:00:26.120 --> 0:00:27.040 been on a tear again. 0:00:27.360 --> 0:00:30.400 Yes, yes it has. It's kind of weird because I 0:00:30.480 --> 0:00:34.800 remember recording a number of commodities related podcasts a couple 0:00:34.800 --> 0:00:39.199 of years ago where everyone was super excited about copper, 0:00:39.360 --> 0:00:43.159 and there was this long term, you know, structural theme 0:00:43.720 --> 0:00:48.440 about systemic undersupply. So the idea that we hadn't invested 0:00:48.520 --> 0:00:51.520 in new minds for ages, and it took so long 0:00:51.600 --> 0:00:53.800 for new minds to come on stream that there just 0:00:54.000 --> 0:00:57.320 wasn't going to be enough copper to power all these 0:00:57.400 --> 0:01:01.480 new electric vehicles or electrified the grid, all these big 0:01:01.520 --> 0:01:04.959 things that the world wants to do. And then for 0:01:05.040 --> 0:01:07.640 a couple of years, copper just kind of went away. 0:01:08.000 --> 0:01:10.679 The price started dropping, and now it's back. 0:01:11.080 --> 0:01:13.720 Well, this is the problem, right, And I think that 0:01:13.720 --> 0:01:17.600 that interim fall, and it did for like twenty twenty 0:01:17.640 --> 0:01:19.560 two and much of twenty twenty three is sort of 0:01:19.600 --> 0:01:21.840 back in the basement a little bit. This does seem 0:01:21.880 --> 0:01:24.800 to be the core problem that people have identified, which 0:01:24.840 --> 0:01:27.640 is that we can be almost certain that there is 0:01:27.680 --> 0:01:31.480 a long term huge demand for copper from all the 0:01:31.520 --> 0:01:36.040 capital spending that's going on for electrification in particular evs, 0:01:36.080 --> 0:01:38.880 et cetera. And we can also, i think, you know, 0:01:38.880 --> 0:01:43.399 as many analysts have observed, forecast supply fairly easily because 0:01:43.440 --> 0:01:45.400 we know what mines are out there, We know that 0:01:45.520 --> 0:01:48.600 minds have a really long lead time et cetera from 0:01:48.680 --> 0:01:51.840 decision to break new ground to actually producing copper. So like, 0:01:51.840 --> 0:01:54.360 there are these certainties, but then the problem is, like 0:01:54.360 --> 0:01:56.720 in the meantime, when you have these sort of periods 0:01:56.720 --> 0:02:00.120 of spot weakness where there isn't a supply shortage or 0:02:00.120 --> 0:02:03.200 there's plenty of copper, you know, those periods don't exactly 0:02:03.280 --> 0:02:06.440 like encourage companies to like get mining or get digging, 0:02:06.520 --> 0:02:10.160 and in fact, they could slow down expansion plans. Even 0:02:10.160 --> 0:02:13.800 if everyone sort of knows the long term math checks out. 0:02:13.800 --> 0:02:16.840 Absolutely, there's that mismatch between the short term and the 0:02:16.919 --> 0:02:20.799 long term outlook. There's also that tension on the ESG 0:02:21.360 --> 0:02:23.760 side of things as well, this idea that you want 0:02:23.880 --> 0:02:28.120 abundant copper in order to decarbonize the energy system, but 0:02:28.200 --> 0:02:30.919 at the same time, a lot of people who are 0:02:31.240 --> 0:02:34.880 ESG minded are going to feel very uncomfortable about encouraging 0:02:35.680 --> 0:02:37.720 new minds in Chile or something like that. 0:02:37.919 --> 0:02:38.880 Yeah, yeah, that's right. 0:02:38.960 --> 0:02:42.240 And you know, obviously they have big environmental impact, they 0:02:42.240 --> 0:02:45.240 have big water impact and so forth. But you know, 0:02:45.320 --> 0:02:48.000 as we said at the beginning, copper is once again 0:02:48.480 --> 0:02:51.080 front and center. The price is back on the rise, 0:02:51.280 --> 0:02:56.160 we're back talking about this long term structural mismatch, et cetera. 0:02:56.480 --> 0:02:58.440 And so I think it's time to sort of delve 0:02:58.480 --> 0:03:01.480 deeper into this question and like see where the math 0:03:01.600 --> 0:03:02.680 is today, so to speak. 0:03:02.800 --> 0:03:05.480 Yeah, I have the Ghostbusters theme in my head, and 0:03:05.520 --> 0:03:07.799 it's like, whenever you want to talk about Copper, who 0:03:07.840 --> 0:03:09.520 are you going to call this guy? 0:03:09.680 --> 0:03:12.120 We're going to talk to Jeff Curry. So we've had 0:03:12.160 --> 0:03:15.560 him on the podcast at least a couple of times before. 0:03:16.120 --> 0:03:18.320 Back in twenty twenty one, we talked to him and 0:03:18.360 --> 0:03:20.760 he talked about this idea of like a new commodity 0:03:20.919 --> 0:03:23.000 super cycled. Of course, oil was surging and all these 0:03:23.040 --> 0:03:26.800 commodities were surging as the global economy was reopening. Then 0:03:26.840 --> 0:03:29.360 we talked to him again in twenty twenty two and 0:03:29.400 --> 0:03:32.160 he said that Hopper specifically may end up being one 0:03:32.160 --> 0:03:36.120 of the the tightest commodity markets he's ever seen, so real, 0:03:36.480 --> 0:03:40.840 real issues with supply and again looking pretty good these days. 0:03:40.840 --> 0:03:43.680 So we are back with Jeff Curry, who is now 0:03:43.840 --> 0:03:46.080 in a new role. So when we talked to him before, 0:03:46.120 --> 0:03:48.560 he was the head of Commodities research at Goldman Sachs, 0:03:48.600 --> 0:03:51.600 but today he is the chief Strategy Officer of Energy 0:03:51.680 --> 0:03:55.560 Pathways at the Carlisle Group. So, Jeff, thank you so 0:03:55.640 --> 0:03:57.640 much for coming back on odd lots. 0:03:58.000 --> 0:04:00.360 Great, it's a pleasure to be here. And hey, copper 0:04:00.400 --> 0:04:03.680 ten thousand and odd lots here I come. Let's go 0:04:03.800 --> 0:04:04.640 like a clock. 0:04:04.800 --> 0:04:07.440 There's our headline right there. So Jeff, what do you 0:04:07.680 --> 0:04:09.480 talk to us about the last few years. It's been 0:04:09.560 --> 0:04:11.520 like over two years since we've talked to you, So 0:04:11.560 --> 0:04:14.920 what's happening in copper world or commodity world over that time. 0:04:15.080 --> 0:04:19.280 Well, let's go back and lay out the supercycles thesis 0:04:19.279 --> 0:04:23.080 that we put forth back in it was October twenty twenty. 0:04:23.520 --> 0:04:27.599 The bottom line is the stories more compelling today than 0:04:27.640 --> 0:04:31.240 it was then. So you really have to ask what 0:04:31.440 --> 0:04:33.840 went wrong? So let's start with the story, and then 0:04:33.920 --> 0:04:37.160 let's go to what went wrong over the last twelve 0:04:37.200 --> 0:04:39.800 to eighteen months. So if we go back and review 0:04:39.839 --> 0:04:43.559 the story, there was structural supply constraints, which we called 0:04:43.640 --> 0:04:47.400 the revenge of the old economy. Put bluntly poor returns 0:04:47.400 --> 0:04:51.120 in the old economy, saw capital redirected to the new economy, 0:04:51.520 --> 0:04:54.400 starving the old economy of the investment it needed to 0:04:54.400 --> 0:04:58.320 grow the supply base. Pretty straightforward story. Still the story 0:04:58.560 --> 0:05:02.360 in markets like upper or even oil to a lesser extent, 0:05:02.680 --> 0:05:06.880 but it's pretty much apparent across the old economy. So 0:05:07.120 --> 0:05:12.960 structural supply story very much intact. What about demand? If anything, 0:05:13.520 --> 0:05:17.000 the structural demand stories have been turbocharged. Let's go and 0:05:17.040 --> 0:05:21.839 review the three big policy initiatives we saw driving demand. 0:05:22.240 --> 0:05:25.599 The way we talked about them back then was redlining 0:05:25.640 --> 0:05:32.360 commodity demand. Reed, they are standard for redistribution policies. Basically, 0:05:32.920 --> 0:05:37.760 as lower income groups consumed with higher wages, higher income, 0:05:37.839 --> 0:05:41.480 they consume a greater share of commodities than the higher 0:05:41.480 --> 0:05:44.920 income groups. That's very much alive and kicking. You look 0:05:44.960 --> 0:05:48.480 at the low unemployment rate, who's the biggest benefactor of that? 0:05:48.640 --> 0:05:51.880 It is the lower income groups. And you know, policies 0:05:52.080 --> 0:05:55.440 still very much in play all over the world, right 0:05:55.480 --> 0:05:59.599 now reinforcing these lower income groups in the consumption of 0:05:59.640 --> 0:06:02.760 commodit They so you are. And then you had e 0:06:03.040 --> 0:06:07.000 the environmental policy turbocharged from the last time we talked, 0:06:07.040 --> 0:06:12.039 you have the IR the repower EU China now part 0:06:12.080 --> 0:06:15.359 of the reason why coppers rallied recently. China's growth was 0:06:15.400 --> 0:06:18.760 over one hundred percent in green capex last year, thirty 0:06:18.800 --> 0:06:21.839 percent this year. So everywhere you look in the world, 0:06:22.120 --> 0:06:27.960 we see environmental policy through green capac stimulating demand for commodities. 0:06:28.440 --> 0:06:31.320 And then the third one, which was the D the 0:06:31.480 --> 0:06:35.560 D globalization. Again that's far greater than we ever thought. 0:06:35.600 --> 0:06:38.919 Look at the potential military spin in the US ninety 0:06:38.960 --> 0:06:42.320 five billion dollars on munitions. We look at what's going 0:06:42.360 --> 0:06:45.160 on in places like Germany one hundred billion dollars of 0:06:45.400 --> 0:06:49.919 military spend. So you've got all three going much stronger 0:06:49.960 --> 0:06:53.039 than what we would have thought two to three years ago. 0:06:53.120 --> 0:06:56.440 So what went wrong? I want to first start with 0:06:57.040 --> 0:06:59.880 the disinflation story, and then I want to finish by 0:07:00.080 --> 0:07:02.320 talking about the dollar. The dollar has been a big 0:07:02.400 --> 0:07:06.719 headwind to commodities. When we think about the disinflation that 0:07:06.800 --> 0:07:09.160 occurred late last year in the early part of this year, 0:07:09.440 --> 0:07:11.920 One thing to keep in mind is that it was 0:07:12.280 --> 0:07:16.800 globally correlated. It occurred against the backdrop of record commodity 0:07:16.880 --> 0:07:20.920 demand and incredibly strong GDP growth in US and even 0:07:21.000 --> 0:07:24.480 China was plus five percent. So what does that tell you? 0:07:24.640 --> 0:07:27.480 Was it demand driven weakness and prices or was it 0:07:27.680 --> 0:07:30.559 supply driven? It tells you it had to be supply driven. 0:07:30.720 --> 0:07:32.520 It's the only thing that could give you that pattern 0:07:32.920 --> 0:07:36.960 of observations. So the supply driven. Where did they get 0:07:37.080 --> 0:07:40.920 the supply? I would argue is through regulatory easy whether 0:07:40.920 --> 0:07:45.360 if it was you know, on sanctions allowing sanctioned oil 0:07:45.440 --> 0:07:51.040 to flow more freely, particularly in places like US, Iran, Venezuelan. 0:07:51.160 --> 0:07:54.200 Obviously that had a cost with Iranian hoodies or even 0:07:54.240 --> 0:07:58.400 the Venezuelans attacking Guyana, but that was a source of supply. 0:07:59.040 --> 0:08:01.960 The other source of supply apply was turning a blind 0:08:02.000 --> 0:08:05.120 eye to environmental policy around the world. We have record 0:08:05.160 --> 0:08:09.760 coal production out of China, Indonesia, and India. Actually that 0:08:09.840 --> 0:08:13.720 increase in coal production was bigger than Saudi Arabia. Im 0:08:13.720 --> 0:08:17.320 backed up gas prices and power prices around the world. 0:08:17.440 --> 0:08:20.960 We saw you know, cutting down mangroves in Malaysia or 0:08:21.280 --> 0:08:26.040 deforestation for more food in places like Latin America. And 0:08:26.080 --> 0:08:30.360 then the third one, regulatory easing was through immigration, so 0:08:30.400 --> 0:08:34.680 you got more energy, more food, and you had more labor, 0:08:34.920 --> 0:08:37.559 which helped create the disinflationary pressures that we saw the 0:08:37.640 --> 0:08:38.920 last sever years. I'm not going to say it's the 0:08:38.960 --> 0:08:42.479 only cause, but it put you know, a big headwind 0:08:42.520 --> 0:08:45.120 to the commodity story. And by the way, that's going 0:08:45.160 --> 0:08:47.840 to run its course, particularly after the election, because you 0:08:47.880 --> 0:08:51.040 look at you know, the clamping down on Iranian sanctions 0:08:51.160 --> 0:08:54.120 one hundred and eighty days from now. Surprise, surprise, that's 0:08:54.160 --> 0:08:57.480 after the November election. Now let's turn let's talk about 0:08:57.520 --> 0:09:01.840 the dollar. That's the other big headwind here. Historically, when 0:09:01.880 --> 0:09:05.240 commodity prices would rise, you would have places like Saudi 0:09:05.280 --> 0:09:10.000 Arabia become long US dollars. They would recycle those dollars 0:09:10.040 --> 0:09:13.960 into US treasuries. Interest rates would go down as they 0:09:14.000 --> 0:09:18.120 bought treasuries. This would create a weaker dollar that would 0:09:18.200 --> 0:09:21.680 reinforce higher reflation. If we called it the three rs. 0:09:21.720 --> 0:09:25.640 You'd start with releveraging in China so you get growth 0:09:25.720 --> 0:09:29.160 outside of outside of the US, and then you would 0:09:29.200 --> 0:09:32.400 have convergence in global growth, and then you would have 0:09:32.679 --> 0:09:35.520 the purchases and the stronger growth in the emerging markets 0:09:35.559 --> 0:09:38.920 buy US treasuries and that would create the weaker dollar 0:09:39.040 --> 0:09:42.040 in hence the reflation, and you were in a virtuous loop. 0:09:42.280 --> 0:09:44.200 That's how we went to one hundred and forty seven 0:09:44.280 --> 0:09:46.800 dollars oil in the two thousands, and the same thing 0:09:46.840 --> 0:09:50.200 happened in the seventies for the first time ever. That 0:09:50.440 --> 0:09:54.839 dollar recycling is not a curry and what is replacing it? 0:09:55.120 --> 0:09:57.600 I like to call it gold recycling. It explains a 0:09:57.640 --> 0:09:59.760 lot why goal prices are as strong as they are, 0:10:00.080 --> 0:10:02.360 and what is the evidence of that is that the 0:10:02.400 --> 0:10:05.880 emerging markets, the brick countries all met with Saudi Arabia 0:10:05.880 --> 0:10:09.679 and other key participants November of last year and discuss 0:10:09.720 --> 0:10:12.400 how they're going to trade with one another using local 0:10:12.440 --> 0:10:16.040 currencies and then whatever it nets out and settling, they 0:10:16.080 --> 0:10:20.040 would settle in gold. So you've taken out that dollar recycling. 0:10:20.200 --> 0:10:22.319 China's not doing it, and think about why would they 0:10:22.320 --> 0:10:24.640 do it with everything they've seen with Russia over the 0:10:24.679 --> 0:10:27.120 course of the last several years. So that's an important 0:10:27.200 --> 0:10:31.240 difference here. It doesn't mean it's a very supercycle, but 0:10:31.280 --> 0:10:34.760 you're unlikely to see that dollar recycling playing out probably 0:10:34.840 --> 0:10:37.520 ever again, which means that what do they do with this? 0:10:37.679 --> 0:10:40.800 If they're buying physical goods like gold, they could be 0:10:40.920 --> 0:10:43.800 buying things like oil, copper, and other commodities as we 0:10:43.880 --> 0:10:46.360 look forward. So those are the two big headwinds why 0:10:46.360 --> 0:10:49.440 I'd argue we're wrong, But the fundamental story still very 0:10:49.520 --> 0:10:51.160 much intact, particularly with copper. 0:10:51.679 --> 0:10:54.199 Jeff, that was an amazing overview. I'm just going to 0:10:54.240 --> 0:10:56.840 say for our listeners that we are talking to Jeff 0:10:56.920 --> 0:10:59.880 from his office in London. There's a little bit of 0:11:00.240 --> 0:11:04.920 sound quality issue. Obviously, we need more transatlantic copper cables 0:11:05.240 --> 0:11:07.680 running under the ocean thanking tracing. 0:11:07.760 --> 0:11:08.040 Thank you. 0:11:08.080 --> 0:11:10.040 That's a good sig. Right, all right. I have a 0:11:10.160 --> 0:11:13.480 very important question for Jeff, which is are you wearing 0:11:13.480 --> 0:11:14.920 a copper bracelet right now? 0:11:15.600 --> 0:11:20.560 Absolutely? It is the most compelling a trade I have 0:11:20.720 --> 0:11:24.360 ever seen in my thirty plus years of doing this. 0:11:24.720 --> 0:11:28.120 You look at the demand story, it's got green cap backs, 0:11:28.200 --> 0:11:32.480 it's got AI. Remember AI can't happen without the energy demand, 0:11:32.760 --> 0:11:35.840 and the constraint on the electricity grid is going to 0:11:35.840 --> 0:11:38.000 be copper. And then you have the military demand, so 0:11:38.440 --> 0:11:43.640 unprecedented demand growth against unprecedented weakness in supply growth. Because 0:11:43.640 --> 0:11:46.280 we have not been investing. It's ted you up for 0:11:46.480 --> 0:11:49.200 what I would argue is the most bullish commodity that 0:11:49.400 --> 0:11:51.839 actually I just quote many of our clients and other 0:11:51.960 --> 0:11:55.360 market participants say, you know, it's the highest conviction trade 0:11:55.360 --> 0:11:56.040 they've ever seen. 0:12:11.559 --> 0:12:14.559 Earlier, you were talking about the sort of general commodities 0:12:14.640 --> 0:12:17.840 supercycle and why that didn't necessarily play out in the 0:12:17.880 --> 0:12:20.760 timeframe that we initially thought it would. But can you 0:12:20.800 --> 0:12:23.360 dig a little bit more into copper because this is 0:12:23.400 --> 0:12:25.880 something that I see over and over again. We talked 0:12:25.920 --> 0:12:29.160 to a lot of commodities experts on the show. Everyone 0:12:29.440 --> 0:12:32.760 seems to have a high conviction on the copper trade, 0:12:32.960 --> 0:12:38.000 or at a minimum see lots of upside potential. Why 0:12:38.080 --> 0:12:41.840 didn't that play out in the sort of immediate post 0:12:41.960 --> 0:12:43.520 pandemic years. 0:12:43.840 --> 0:12:48.360 Because investors were unwilling to take on blind faith that 0:12:48.600 --> 0:12:51.640 China property market could sink and you could still be 0:12:51.800 --> 0:12:55.400 long copper in other base metals because as for as 0:12:55.440 --> 0:12:58.120 long as many of these people had been trading commodities 0:12:58.520 --> 0:13:02.040 without China, you could not be bullish. And what happened 0:13:02.040 --> 0:13:05.080 in twenty two and twenty three was the Chinese property 0:13:05.120 --> 0:13:08.559 market started to sink and sink very quickly, and that 0:13:08.720 --> 0:13:11.439 discouraged investors to get long and I think they have 0:13:11.559 --> 0:13:14.920 now seen enough evidence last year and this year. For example, 0:13:15.200 --> 0:13:17.520 you know, copper demand so far this year is up 0:13:17.600 --> 0:13:22.440 six percent year over year despite an incredibly weak property 0:13:22.480 --> 0:13:25.280 market in China. So I think what has shifted here 0:13:25.920 --> 0:13:30.720 is confidence from investors in metals that you can buy 0:13:31.120 --> 0:13:34.920 these markets based upon the green cap back story despite 0:13:35.000 --> 0:13:37.520 a weak China property story. And I think that's what 0:13:37.679 --> 0:13:41.160 has really changed in the last let's say six to 0:13:41.200 --> 0:13:42.200 eighteen months. 0:13:42.760 --> 0:13:46.400 Let's talk more about the long term supply outlooks. So 0:13:46.480 --> 0:13:48.960 the basics, Yes, it takes a really long time to 0:13:49.080 --> 0:13:51.640 get a new copper mind online. Maybe it takes even 0:13:51.720 --> 0:13:54.840 longer than in the past due to local opposition and 0:13:54.920 --> 0:13:58.960 concerns about the environmental impact. What's happened in terms of 0:13:59.120 --> 0:14:03.240 planned new minds over the last three years. Are there 0:14:03.400 --> 0:14:06.400 new projects that are breaking ground or at least pencils 0:14:06.440 --> 0:14:08.440 down yet that we hadn't seen in twenty twenty one. 0:14:08.440 --> 0:14:09.840 What's happening in the planning cycle. 0:14:10.320 --> 0:14:12.840 You don't have to look any further than the Anglo 0:14:12.960 --> 0:14:18.199 American bids BHP finds it cheaper to buy Anglo American 0:14:18.360 --> 0:14:21.800 then putting a drill into the ground, And that's pretty 0:14:21.840 --> 0:14:24.240 much been the case across the board, is that they're 0:14:24.280 --> 0:14:28.800 finding ways to increase supply, particularly through MNA activity as 0:14:28.800 --> 0:14:32.480 opposed to having to do it through organic let's call 0:14:32.520 --> 0:14:35.600 it green field investment. When we look at, you know, 0:14:35.640 --> 0:14:38.760 the commodity supercycle in the two thousands, how did it 0:14:38.800 --> 0:14:42.680 start off? Started off with the creation of BHP REO. 0:14:43.160 --> 0:14:46.480 You know, then you had exceon Mobile, VP Shell, all 0:14:46.480 --> 0:14:50.920 the super majors were all created, both in metals and 0:14:51.080 --> 0:14:53.560 energy at the beginning of that supercycle because it was 0:14:53.680 --> 0:14:57.120 easier to consolidate to grow your supply than it was 0:14:57.160 --> 0:15:00.080 to do it through green field investment. And so well, 0:15:00.320 --> 0:15:02.920 because we observe that going on, it tells you we're 0:15:02.960 --> 0:15:05.160 not at the point right now where people are willing 0:15:05.200 --> 0:15:08.280 to make greenfield investments because they can buy other companies 0:15:08.320 --> 0:15:11.320 more cheaply, which means prices got to go higher and 0:15:11.320 --> 0:15:13.960 the conviction has got to be greater before you start 0:15:13.960 --> 0:15:16.840 to see that substantial rise in greenfield investment. 0:15:17.120 --> 0:15:19.160 So one thing I wanted to ask is what is 0:15:19.200 --> 0:15:23.240 the impact of price on investment here. This is a 0:15:23.400 --> 0:15:25.960 kind of a weird question, but like, does it actually 0:15:26.040 --> 0:15:29.000 make much of a difference if copper prices start rallying? 0:15:29.480 --> 0:15:32.640 If we do see another record in the price per ton, 0:15:33.040 --> 0:15:36.480 would you expect to see an investment response of some 0:15:36.680 --> 0:15:41.520 sort eventually, Yeah, even if it's on a longer term timescale. 0:15:41.480 --> 0:15:44.320 Yeah, eventually you should. We saw it in the two thousands. 0:15:44.440 --> 0:15:46.880 Let's review what happened in the two thousands, because it 0:15:46.960 --> 0:15:50.520 think is pretty instructive to right now, that supercycle lasted 0:15:50.520 --> 0:15:54.840 twelve years from basically two to around thirteen or fourteen, 0:15:55.280 --> 0:15:59.640 and the supercycle in the seventies basically lasted sixty eight 0:15:59.760 --> 0:16:03.400 to eighty, again twelve years. Why the twelve years years 0:16:03.480 --> 0:16:08.720 one through three are usually higher prices creates a confidence 0:16:08.880 --> 0:16:11.960 that hey, this is real. We're three years into this 0:16:12.200 --> 0:16:15.920 and the confidence is so so, you know, the diehards 0:16:15.960 --> 0:16:18.040 that I talk to have a lot of confidence, which 0:16:18.080 --> 0:16:21.360 means you probably need more higher prices for people become 0:16:21.480 --> 0:16:26.000 convicted that it's actually for real. What creates the second 0:16:26.040 --> 0:16:30.040 big uptick in prices because once these companies start to spend, 0:16:30.720 --> 0:16:33.560 then you get cost inflation and that drives you up 0:16:33.600 --> 0:16:35.200 to the next level. And if you look at what 0:16:35.320 --> 0:16:38.520 happened with copper in the two thousands, we went from 0:16:38.600 --> 0:16:41.200 let's say two thousand a ton to four thousand a 0:16:41.240 --> 0:16:44.400 ton over that first three years, and then around six 0:16:44.480 --> 0:16:48.080 throughh eight it exploded to eight thousand dollars a ton 0:16:48.120 --> 0:16:50.560 because that's when they started to spend. But they had 0:16:50.640 --> 0:16:55.040 to achieve that confidence that still is not apparent in 0:16:55.080 --> 0:16:58.400 this market. And then let's say, you know, the final 0:16:58.480 --> 0:17:01.240 five to six years is when you begin to deep 0:17:01.240 --> 0:17:04.640 bottle neck the system and then the investment plays out 0:17:04.720 --> 0:17:07.639 and you know, it takes another let's say seven years 0:17:07.680 --> 0:17:10.439 and you get actual supply. So where are we in 0:17:10.480 --> 0:17:13.440 that process? We're still in that first three years creating 0:17:13.520 --> 0:17:16.760 conviction around Is this for real, our estmates? You need 0:17:16.800 --> 0:17:20.080 to be above nine ten thousand dollars a done before 0:17:20.119 --> 0:17:23.360 people really start to be confident that they can make 0:17:23.400 --> 0:17:25.680 this type of investment. And I think the other thing 0:17:25.720 --> 0:17:28.680 too is not only does their prices have to reach 0:17:28.800 --> 0:17:31.399 those levels where the breake events begin to happen, but 0:17:31.440 --> 0:17:34.280 they got to go above to create some type of 0:17:34.320 --> 0:17:37.000 confidence that they have some type of cushion, which means 0:17:37.080 --> 0:17:39.840 we like to see much higher prices before you start 0:17:39.840 --> 0:17:41.120 to see that supply response. 0:17:42.119 --> 0:17:45.840 I have a very odd ball question, but I've been 0:17:46.040 --> 0:17:48.280 wanting to ask this question to someone who knows for 0:17:48.280 --> 0:17:51.200 a long time. So very brief story. Sometimes they take 0:17:51.280 --> 0:17:53.600 ubers to work. I haven't in a while, but I 0:17:53.680 --> 0:17:55.840 used to sometimes take ubers to work, and when the 0:17:55.920 --> 0:17:57.840 driver's seas I'm working for Bloomberg, they want to bring 0:17:57.920 --> 0:18:00.240 up something finance, and usually it's like, what do you 0:18:00.280 --> 0:18:02.640 think about like dogecoin or bitcoin or something like that. 0:18:02.680 --> 0:18:05.639 But one time I had an Uber driver and he's like, 0:18:05.760 --> 0:18:07.720 I'm really you know, you're talking about gold, he said, 0:18:07.720 --> 0:18:11.880 I'm really bullish silver because I believe there's not enough 0:18:11.920 --> 0:18:15.320 copper mining going on in the world, and silver is 0:18:15.359 --> 0:18:18.560 often a byproduct of copper mining, and there's a lot 0:18:18.600 --> 0:18:21.440 of silver content and some of this evy stuff, particularly 0:18:21.560 --> 0:18:24.320 solar panels, he said, and therefore there's going to be 0:18:24.359 --> 0:18:26.159 a shortage of silver. And I know this is like 0:18:26.160 --> 0:18:28.320 a little diversion, but I just had to get this 0:18:28.400 --> 0:18:30.679 off my head because we're here talking to Jeff Curry. 0:18:30.880 --> 0:18:33.040 What do you think about my uber drivers thesis? 0:18:33.080 --> 0:18:35.600 I like that you're asking questions on behalf of your. 0:18:35.600 --> 0:18:38.560 Uber I'm yeah, and I still have his context. I 0:18:38.640 --> 0:18:40.760 still have his context. So two years later, I'm finally 0:18:40.760 --> 0:18:42.880 gotta get a chance to get back to him on this. 0:18:43.440 --> 0:18:46.160 What do you think about my uber driver's silver thesis. 0:18:46.800 --> 0:18:51.360 I definitely think there's legitimate arguments behind his solar thesis, 0:18:51.400 --> 0:18:53.359 and you know, it's one of the arguments we put 0:18:53.400 --> 0:18:56.040 forth for prices moving higher. But the one thing that 0:18:56.080 --> 0:18:59.320 we watched, you know, particularly back in you know, it 0:18:59.359 --> 0:19:02.800 was in March April of twenty twenty one when everybody 0:19:02.880 --> 0:19:05.840 it was actually during that GameStop era when people were 0:19:05.840 --> 0:19:07.119 they were going to move and they were going to 0:19:07.200 --> 0:19:10.760 try to short squeeze silver. The problem with silver is 0:19:10.800 --> 0:19:14.040 there's just too much of the stuff around. There's you know, 0:19:14.240 --> 0:19:18.520 millennia of production is sitting above ground, like gold, but 0:19:18.760 --> 0:19:22.040 unlike gold, it is not as rare, so it's more plentiful. 0:19:22.080 --> 0:19:24.520 So I think, yeah, it will behave similar to what 0:19:24.640 --> 0:19:27.040 he said, But I'm never going to be jumping on 0:19:27.080 --> 0:19:31.000 the super bowlish bandwagon on silver just because of the 0:19:31.040 --> 0:19:33.520 fact that there's just so much of it around the 0:19:33.560 --> 0:19:36.399 world and it's not nearly as rare as something like gold. 0:19:36.720 --> 0:19:38.800 Yeah, even I have a bunch of silver I think 0:19:38.840 --> 0:19:41.280 we've talked about this first. For my dad keeps giving 0:19:41.320 --> 0:19:45.240 me silver coins from his collection for my birthday and 0:19:45.320 --> 0:19:48.800 for Christmas, and so I'm expanding this collection of silver 0:19:48.880 --> 0:19:51.320 coins to the point where I think I could successfully 0:19:51.720 --> 0:19:55.040 have one of those silver stacking channels on YouTube at 0:19:55.040 --> 0:19:57.520 this point. That would be fun. Jeff, There's one other 0:19:57.560 --> 0:19:59.400 thing I want to ask you, So you know we're 0:19:59.400 --> 0:20:04.159 talking about the price of copper, the future's price, I 0:20:04.200 --> 0:20:08.280 want to ask you about the copper concentrates market and 0:20:08.400 --> 0:20:10.840 get into like a little bit of the discrepancy between 0:20:11.040 --> 0:20:16.360 like maybe the financialized price versus the physical price. Can 0:20:16.359 --> 0:20:19.119 you walk us through what's been happening there, because in 0:20:19.160 --> 0:20:23.000 some respects like this is where the immediate shortage is 0:20:23.040 --> 0:20:26.040 playing out, even if it hasn't been reflected up until 0:20:26.080 --> 0:20:28.280 recently in the overall futures price. 0:20:29.040 --> 0:20:32.879 Very good question, Tracy. You know, when we think about metals, 0:20:33.040 --> 0:20:36.639 the or that comes out of the mind that typically 0:20:37.000 --> 0:20:40.240 gets turned into concentrate and ship you know somewhere around 0:20:40.280 --> 0:20:43.720 the world where it basically has to be smelted into 0:20:44.040 --> 0:20:47.280 you know, a refined type of hopper that it can 0:20:47.359 --> 0:20:50.399 be used and sent on into you know, markets like 0:20:50.480 --> 0:20:53.720 wiring and so forth. But it's there where you saw 0:20:53.760 --> 0:20:56.280 the very first signs of a shortage. It actually was 0:20:56.320 --> 0:21:01.720 in sk in Korea, where there was not enough concentrate 0:21:01.840 --> 0:21:04.960 to go around to be able to smell into something 0:21:05.000 --> 0:21:08.520 that was more useful. And so it's called the you know, 0:21:08.560 --> 0:21:12.800 the TC charges, the concentrate charges, And right now everybody's oh, 0:21:12.800 --> 0:21:16.640 they're negative, which is telling you the shortage is at 0:21:16.760 --> 0:21:21.639 the mine and that concentrate not at the inn used consumer. 0:21:21.680 --> 0:21:24.040 Yet it's gonna work its way down there. By the way, 0:21:24.080 --> 0:21:26.760 it's the same thing happens in refining margins. When you 0:21:26.800 --> 0:21:28.879 have a real big shortage in oil, it crushes the 0:21:28.920 --> 0:21:31.600 refining margins. And so the fact that you have zero 0:21:31.680 --> 0:21:35.959 or negative TC charges right now is an indication that 0:21:36.000 --> 0:21:39.439 you have shortages at the mine, which says eventually this 0:21:39.520 --> 0:21:42.120 is going to work further downstream, which as we look 0:21:42.160 --> 0:21:44.720 out further, particularly towards the end of the year, we'd 0:21:44.760 --> 0:21:48.520 expect those shortages to work further downstream, more towards this 0:21:48.560 --> 0:21:51.920 consumer in a way from the mind, but absolutely, I 0:21:51.920 --> 0:21:54.040 think that's a critical And it was about two or 0:21:54.040 --> 0:21:55.919 three weeks ago. One morning I was looking at the 0:21:55.960 --> 0:21:59.879 Koreans and go, wow, here we are finally physical shortages 0:22:00.240 --> 0:22:03.199 happening at the concentrate level, which is telling you just 0:22:03.200 --> 0:22:04.960 a matter of time before we see it at the 0:22:04.960 --> 0:22:06.160 inn us consumer level. 0:22:06.560 --> 0:22:09.080 So, Jeff, I just want to nail you down on 0:22:09.280 --> 0:22:12.000 the price target for copper and the timeframe just so 0:22:12.040 --> 0:22:15.399 that you know when we have you back on in Yeah, 0:22:15.440 --> 0:22:18.159 in a year or two. We know exactly what our 0:22:18.200 --> 0:22:21.000 priors were and what our expectations were for the move. 0:22:21.080 --> 0:22:24.479