Increased global demand for precious metals, particularly copper, has increased negotiating leverage in foreign markets that mine those metals.
Market prices for copper continue to rise considerably in the wake of this newfound leverage.
The price of copper, for instance, rose significantly in value this year to $7,000 a ton. In 2016, a ton of copper was worth about $4,300 — a 63% increase.
The price clim has international mining companies scrambling to uncover new copper supply.
Miners are flocking to countries such as Chile, home to a highly developed mining industry and the world’s main supplier, but also remote frontier markets such as Mongolia and the Democratic Republic of Congo.
In the rush to find new sources of copper also comes an appreciable loss in negotiating power for buyers. Copper is a major input for big developed and developing economies, including China, India and the West.
David Manley, an economist for the London based Natural Resource Governance Institute, notes that frontier market governments can now negotiate deals that increase their take on the profits.
Before the price surge in precious metals, frontier markets had to take what they could get. “We know every time there’s a price boom or a price bust, you see a lot of government’s trying to change taxes either up or down,” said Manley.
“The miners just don’t have as much as power as they did,” Manley continued.
Mining industry companies and private investors used to steer clear of frontier markets.
Frontier market governments usually feature unstable governments, fragile infrastructure, harsh weather environs and volatile or weak economies.
Such countries can also experience intense and dangerous political violence.
However, frontier markets also can be wealthy in resources that have current or future business applications to businesses in emerging markets and in the developed world.
Another factor contributing to the marked leverage that frontier market now enjoy is rising demand is electric cars and renewable energy technology.
Cobalt and other precious metals are used in component and parts for electric cars and renewable energy tech.
Small-cap winners galoreThe big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; Baidu.com (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
Smarter cryptocurrency investmentsThe stock market crash of 2008 was the catalyst for his journey into alternatives. And interestingly, it was the impetus behind the creation of Bitcoin and the blockchain technology behind it. Keene Little wasn’t ready to risk his money yet but he was very curious, so he began charting Bitcoin’s technical patterns. What finally convinced him to dip a toe into digital currencies was seeing that they followed familiar price patterns that could be analyzed and successfully acted on. Now he shares those insights with subscribers to the Crypto Wealth Protocol.