Rick Rule on the coming commodities supercycle: Demand will exceed supply for these metals

Uranium and copper both play a role in the green energy paradigm of investing, and both of these metals are likely to benefit from supply and demand imbalances, said Rick Rule, Director of Sprott Inc.

“There’s a great green angle if you care about carbon-free, emissions-free energy, uranium is the be-all and end-all, despite the fact that people don’t like it” he said. “An easier investment theme…would be copper. The electrification of the world, not just electric vehicles, will continue to increase demand for copper. At the same time, humankind lives on copper mines that were discovered 30 and 40 years ago.”

The mining industry has limited options to increase supply in the future, while demand for copper is going to continue to grow, Rule noted in an interview with Michelle Makori.

“The big thinkers of the world seem to think that you can stand on top of a copper mine, throw in water and fertilizer and grow more copper. But that’s not how it works. Everyday you mine and your business gets smaller. To permit a big copper mine in the United States could take 15 to 20 years. To finance it, put it into production. Very, very capital intensive, very time intensive. We’ve run out of time and the reckoning is coming,” he said.

Part of the reason that supply is not going to catch up to demand immediately is due to a lack of investment into the sector, Rule said, adding that a coming commodities supercycle will be the likely result.

“We are definitely coming into a supercycle as a consequence of under-investment and therefore supply shortfalls. I think too, in the very near-time, that the economy surprises us to the upside simply because it’s coming off a very low bottom,” Rule said.

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