Copper Soars After Trump Victory

Base Metals Investing

Donald Trump will be the 45th US President and his vision for infrastructure is boosting the price of copper.

November is proving to be an exciting month for copper. Only days after registering a 6-month high, copper surged upwards by 3 percent to $2.54 as of Wednesday afternoon.
Donald Trump clinched the US presidency on Tuesday night and defied late polls that showed opponent Hillary Clinton was going to win. Trump won 276 electoral college votes against Clinton’s 218 and as election results poured in, the price of gold surged — likely because investors turn to safe havens in times of economic and political uncertainty.
Copper jumped on Wednesday, and copper stocks such as Freeport-McMoRan (NYSE:FCX), the world’s largest copper producer, was up 8.02 percent at the end of the trading day, 93 percent up year to date; while Rio Tinto (NYSE:RIO) registered a 7 percent increase at the end of the trading day.

In an interview on CNBC, Boris Schlossberg of BK Asset Management said that in the last few months, copper has been predicting this global pick-up in demand. However, he says, “The true boost you see in copper today is very much the idea of infrastructure spend and growth that you saw from the sliver of the Trump program yesterday in his acceptance speech.” Schlossberg predicts that copper can go even higher.

Trump’s Vision for Infrastructure

Trump’s campaign focus was to, “Make America Great Again” and among other things, promised to build an “impenetrable physical wall on the southern border, on day one.” Trump’s vision on infrastructure states that he will pursue an “America’s Infrastructure First” policy that will support investments in construction, steel manufacturing, and other sectors to build the transportation, water, telecommunications and energy infrastructure. The Wall Street Journal says that copper could benefit from the expected increase in infrastructure spending, and quoted Saxo Bank Head of Commodity Strategy Ole Hansen about this emphasis in infrastructure, saying this “could be a bullish development for the metal.”
It is important for investors to take note that Trump’s vision combined with a stabilizing economy for China, the world’s biggest copper consumer, could potentially mean that a recovery for the industrial metal is at hand. FocusEconomics states in their recent commodities report, “Prices are expected to slow slightly by the end of this year before increasing strongly next year on strengthening demand.”
Reuters suggests that analysts are cautious that copper will continue its upward trend, but could dip slightly in the short term. In INN’s interview with David Morgan, he also remains neutral, but hopeful about copper, saying “I want to see a larger increase in the copper price, out of the range it’s in right now… and I’d like to see it sustained.”

Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Pia Rivera, hold no direct investment interest in any company mentioned in this article.
The Conversation (0)