Portfolio Review, July 2023

Our first big winner emerges

July was a mixed bag for our commodity positions, with a strong final week offsetting widespread early declines. But under the surface lots of progress is being made. We now have our first big winner (up 80%), while the silver, copper, oil, and uranium stories keep improving. Starting with sector developments and continuing on to notable company reports …

Copper

From mining analyst Rick Mills at Ahead of the Herd:

The global copper market is entering an age of extremely large deficits

Simply put, the road to reaching net zero begins and ends with copper. All infrastructure built to support renewable energy uses large amounts of copper, as the metal is a highly efficient conductor of electricity and heat.

To keep the energy transition going, millions of feet of copper wiring will be required for strengthening the world’s power grids, and hundreds of thousands of tonnes more are needed to build wind and solar farms. An offshore wind turbine, for example, contains 8 tonnes of copper per megawatt of generation capacity.

Electric vehicles, now a fast-rising source of demand, use over twice as much copper as gasoline-powered cars, which contain about 30 kg. Not to mention, there is more than 180 kg of copper in the average home, reminding us just how indispensable the metal really is.

Adding it all up, demand for copper is going to be staggering as we look ahead into the future.

Silver

Silver faces a perfect solar storm as real demand could far exceed projections

(Kitco News) - Silver’s inelastic supply may be overwhelmed by skyrocketing demand from solar panel manufacturers as early as this year, according to Peter Krauth, editor of SilverStockInvestor and author of The Great Silver Bull.

Krauth sat down with Kitco in June to go over the current projections for silver supply and demand in light of the latest numbers coming from the solar industry. He said forecasts like those issued by the Silver Institute just months ago may already be out of date as solar continues to drive demand for the precious metal.

“Solar alone is 12 percent of all silver demand every year, that was 140 million ounces last year,” Krauth said. “The forecasts are about 160 million ounces this year, which I believe are going to be dramatically outpaced when we see the final numbers about a year from now.”

Krauth pointed to two major factors which he believes have not been fully reflected in the silver demand scenario. First, he said the current projections underestimate the volume and pace of new solar installations. “You have all sorts of tax credits worldwide going into solar,” he said. “Solar is, in many many cases, in many places, the cheapest form of additional electricity output. So solar’s become very cheap, and it's quick and easy to install.”

China continues to dominate the worldwide market for solar panel production, representing about 80 percent of the global production capacity. But Krauth said China is also consuming more solar panels domestically, with installations very high and growing quickly.

“Bloomberg believes that in 2023, China will install three times as much solar power as they did in 2021,” he said. “These are just tremendous numbers that are coming at us. I think that by the time we get to a year from now, and we see what the 2023 numbers turn out to be, I think 160 million ounces is going to look very, very conservative. It's probably going to be closer to 180 or 200 million ounces.”

Uranium and oil

In the following interview, energy consultant Doomberg covers everything from the failure of today’s “green” energy policies to the likelihood of much higher oil prices to the superiority of nuclear as a baseline power source. One example:

“The energy payback for nuclear is amazing. It takes a nuclear plant about six weeks to pay back the full amount of energy that went into its construction. It takes years and years for solar and wind to pay back their cost of construction.”