Part II: Special Copper Edition – Fat Tail Daily

Continuing with our copper focus this week, I want to explore the potential set-up in today’s market.

To do that, let’s step back to 2005…

The term ‘BRICs’ was starting to enter investor folklore.

That’s because emerging countries like Brazil, Russia, India, and especially China were delivering outsized growth.

After the devastating Dot Com Bust in 2000 and the September 11 attacks in 2001… Finally, a positive story was emerging for investors.

Global capital was beginning to flow from West to East.

Yet, tensions remained high in the early 2000s.

The US was doubling down on its ‘War on Terror’, and conflict was raging across the Middle East.

Like today, markets remained on edge; geopolitical anxiety was a strong force keeping a lid on speculation.

And I would say that things mostly stayed that way until June 2005.

Exactly 20 years ago today.

That’s when the market bellwether, ‘Dr Copper,’ began to pivot away from the broader market.

By early 2005, this growth commodity was approaching all-time highs. Consolidating and trading within a tight range.

And, like today, few were paying attention.

Back in 2005, there was a strong case for investing in commodities

The resource market had been in a prolonged era of stagnation, suffering from years of underperformance against US equities.

Lack of investment through the 1980s and 1990s hinted at supply shortages.

Meanwhile, growth across BRIC nations emerged as a source of future demand.

But even then, a commodity bull market was not at all certain.

But then… this happened:

Copper exploded!

In June 2005… 20 years ago today… copper underwent one of the most spectacular moves in history.

After breaking above its late 1980s and mid-1990s highs, copper experienced an incredible 140 per cent melt-up in 18 months.

That’s the spike you can see on the chart above.

Just to be clear, this is not a stock; this is the price action for a common industrial metal used in everything from plumbing to electrical work.

Under normal conditions, a 10-20% move over a few months would be dubbed very ‘bullish’ for this household metal.

The 140% surge in 2005 was simply breathtaking.

For perspective, gold’s price action over the last 12 months has been described as spectacular… That’s been a mere 36% move!

But perhaps the most important aspect of that event is this:

Copper’s 2005 ‘break-out’ moment unleashed junior mining speculation.

A few old records I’ve looked up show certain junior copper stocks rising 600-800% over that period.

It was an incredible opportunity.

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Why Today’s Price Action Echoes 2005

In 2005, the technical setup aligned perfectly with fundamental strength.

And today, as copper approaches all-time highs, supply and demand dynamics appear equally as strong.

So, sit tight; we could be close to a significant turning point in the commodity cycle.

As I mentioned to my paid readership group, this is what we’ve been positioning for ever since we launched Diggers & Drillers in 2022.

While we have clocked up some ‘early’ cycle winners like NGEx and Filo Mining… I believe there are much bigger opportunities ahead.

And that’s great news if you’re still looking at joining D&D!

Okay, let’s turn our attention to the fundamental drivers in this market—the story behind copper’s recent price strength.

And why does the timing look remarkably similar to 20 years ago?

Understanding Today’s Copper Price Catalyst

Like in the early stages of the early 2000s commodity boom, there’s a fundamental basis for higher copper prices.

As I mentioned on Monday, the consensus view is that US imports are driving higher copper prices in 2025. Certainly, it’s important.

But I don’t believe Copper’s record run is as one-directional as most assume.

For one thing, Chinese equities have also been a surprise performer in 2025.

The iShares China Large-Cap ETF [ASX: IZZ] is up 17.5% year-to-date.

Or almost 50% over the last 12 months!

Who would have thought!

It has eclipsed the performance of virtually every other market, including the tech-heavy Nasdaq100.

Virtually every market commentator got the China story wrong last year and missed one of the market’s best-performing sectors.

That’s why I told readers to look beyond the biased reporting on China and buy up resource stocks at the height of the mid-year panic in 2024.

And a hat tip to my colleagues, Greg Canavan and Callum Newman who were also lone voices last year getting their readers into this spectacular contrarian opportunity.

And given that China remains the most important driver of copper demand, outperformance across its large-cap stocks remains an important leading indicator of growth in the Chinese economy.

Again, this has echoes of the early 2000s commodity boom.

Yet, this time round, there are MORE growth drivers

Tariffs and re-shoring manufacturing back to the US will require vast investment in the country’s industrial complex.

That will put enormous demand on commodities like copper and steel as America looks to rebuild its manufacturing empire.

Perhaps resembling China’s early 2000s industrial build-out!

That might sound like an exaggeration, but it’s precisely what Trump’s trying to engineer for the American economy.

Perhaps that’s what investors should be focussed on when they see record volumes of copper imports pouring into the US market!

Yet, there’s one more important angle to the copper demand story that no one is addressing.

That’s what we’ll dig into in our final special three-part series on the copper market.

Stay tuned!

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers