SUPERNEWS

Macro

Gold, Copper Stocks Surge on AI, China: Fund Managers' Top Picks

Gold and copper prices surge to record highs amid AI demand, China's market, and global tensions, spotlighting mining stocks like Northern Star and Southern Copper.

By Alex P. Chase

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4/23, 20:27 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Freeport-McMoRan, Inc.
Southern Copper Corporation
Teck Resources Ltd
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Key Takeaway

  • Gold and copper prices surge due to geopolitical tensions, central bank purchases, and AI demand; gold hits $2,400, copper at highest since 2022.
  • Fund managers bullish on Northern Star (gold) and Southern Copper (copper), citing US economic strength and fiscal stimulus as drivers.
  • Wall Street favors Freeport-McMoRan among copper miners for AI boom impact; JPMorgan highlights Teck Resources for potential upside.

Gold and Copper Shine Amidst Global Tensions

Gold prices have soared to record highs, touching $2,400 on April 12, driven by geopolitical tensions, central bank acquisitions, and robust demand from China. Similarly, copper has seen a significant uptick, with futures reaching their highest level since 2022, buoyed by the artificial intelligence boom and the green energy transition. Kingsley Jones of Jevons Global attributes the bullish outlook on these commodities to potential inflation resurgence and ongoing fiscal stimulus across major economies. The demand for copper, essential for energy transition and AI technologies, is expected to rise further.

Mining Stocks in the Spotlight

Investors and analysts are showing a keen interest in mining stocks, particularly those involved in gold and copper exploration. Australian gold miner Northern Star and copper miner Southern Copper have been highlighted by Kingsley Jones as promising investment opportunities. Portfolio manager Kamil Dimmich points to geopolitical risks and Chinese demand as key drivers for gold's price rally, with central bank buying and retail demand playing significant roles. On the copper front, Jefferies and JPMorgan have identified Freeport-McMoRan and Teck Resources, respectively, as top picks, citing the metal's critical role in data centers and the green energy buildout.

Exploration Success and Market Dynamics

NevGold Corp's recent discovery at its Zeus Copper Project in Idaho indicates significant copper porphyry potential, aligning with the broader market trend towards materials essential for technological and industrial applications. The surge in gold and copper prices reflects their roles as hedges against inflation and their indispensability in various applications, from electronics to renewable energy technologies. Analysts predict further support for copper in the second half of 2024 due to concentrate shortages and firming demand.

Street Views

  • Kingsley Jones, Jevons Global (Bullish on gold and copper):

    "The primary concern is about a possible resurgence of inflation due to the evident strength in the US economy. The other factor is the fiscal stimulus that is ongoing in the USA, Europe and other nations with government subsidies for reshoring of manufacturing and green energy."

  • Kamil Dimmich, North of South Capital (Bullish on gold):

    "Gold is 'interesting,' given geopolitical risks from the Middle East and Chinese demand... One of the thoughts we’re having is people have stopped buying property with their savings and Chinese are still saving a huge amount, they’re not spending the money. That’s one of the problems China has economically and what they’re doing is — they’re pouring the savings instead of into real estate into gold."

  • Jefferies Analysts (Bullish on copper miners due to AI boom):

    "Global copper demand by data centers will increase from 239 kt (thousand tons) in 2023 to at least 450 kt per annum in 2030... Copper demand will already 'significantly exceed' supply starting this year — and that’s not even accounting for demand growth from data centers."

  • JPMorgan Analysts (Bullish on Teck Resources for copper exposure):

    "Teck Resources as its top pick for copper, presenting the most upside when using JPMorgan’s bullish price forecast... Most investors like American miner Freeport-McMoRan as the 'cleanest way' to play copper."

  • Ian Roper, Astris Advisory Japan KK (Bullish on copper):

    "Extreme tightness in raw materials due to so many mine disruptions in recent months. This will cause Chinese copper output to fall later in the year and lead China to import more copper metal, at the same time as rest of world continues consume more on back of green energy buildout."