In the middle of the recession last year, I invested in Copper $COPPER miner Freeport-McMoran $FCX . This was a great investment since it gained over 600%. But in recent weeks, the stock entered a bear market as copper prices are falling.
There are two main reasons why copper prices are falling in recent weeks:
1. China releasing their reserves to drive prices down
2. The Federal Reserve System indicating that they may raise interest rates in 2023, hence strengthening the Dollar
Copper prices are always volatile and this bear market is mainly for macroeconomics reasons. In the long-term, the tailwinds on copper are still here:
1. Electric Vehicles, renewable energy, 5G are technologies that will increase copper demand
2. Construction and electrification in the developing world
3. Supply is not here to meet the rising demand. There is going to be a Copper Supply Gap.
Freeport-McMoran is one of the most volatile copper miners due to its high production costs but in this bear market, it outperformed Southern Copper $SCCO . Things are improving for Freeport-McMoran. They are lowering costs and may start paying dividends and buyback shares. The stocks are always going to be volatile but I believe if we're focusing on the long-term Copper bull market, we should not be worried.