Biden’s infrastructure plan if passed by American parliament will result in additional copper demand between 150,000 tonnes and 300,000 tonnes of copper to build electric vehicles and electric vehicle infrastructure. My calculation is based on minimum additional demand for copper in EV and EV infrastructure.
Below is Biden’s infrastructure plan or infrastructure investment
- $115 billion to modernize the bridges, highways and roads that are in the worst shape. The White House outline estimated 20,000 miles (32,187 kilometers) of roadways would be repaired, while economically significant bridges and 10,000 smaller bridges would get fixed.
- $85 billion for public transit, doubling the federal government's commitment in an effort to shorten the repair backlog and expand service.
- $80 billion to modernize Amtrak's heavily trafficked Northeast Corridor line, address its repair backlog and improve freight rail.
- $174 billion to build 500,000 electric vehicle charging stations, electrify 20% of school buses and electrify the federal fleet, including U.S. Postal Service vehicles.
- $25 billion to upgrade air travel and airports and $17 billion for waterways and coastal ports.
- $20 billion to redress communities whose neighborhoods - typically nonwhite - were divided by highway projects.
- $50 billion to improve infrastructure resilience in the aftermath of natural disasters.
- $111 billion to replace lead water pipes and upgrade sewer systems.
- $100 billion to build high-speed broadband that provides 100% coverage for the country.
- $100 billion to upgrade the resilience of the power grid and move to clean electricity, among other power projects.
- $213 billion to produce, preserve and retrofit more than 2 million affordable houses and buildings.
- $100 billion to upgrade and build new schools.
- $18 billion to modernize Veterans Affairs hospitals and clinics, and $10 billion for federal buildings.
- $400 billion to expand long-term care services under Medicaid.
- $180 billion invested in research and development projects.
- $300 billion for manufacturing, including funds for the computer chip sector, improved access to capital and investment in clean energy through federal procurement.
- $100 billion for workforce development.
American demand for copper, nickel and steel will be rise over fifty percent (in next five years) if Biden’s plan is implemented in totality. In my view fifteen percent demand can be met through scrap recycling. Indians adopting electric vehicles will be felt from next year when charging infrastructure increases to desired levels.
A typical battery electric vehicle contains 83 kilograms of copper, for everything from high-voltage wiring to rotors. That’s compared with 23 kg in an internal-combustion vehicle.
Copper and steel price rise are not cyclical anymore. They are in the long term bullish zone. Copper price will crash only if there is a sharp reduction in investment demand. Investment demand constitutes over thirty percent of copper price. My long term forecast says that copper price can rise to $16888 and $31023 in the next seven years as long as price trades over $6899-$7350 zone. Copper could be the next gold.
Nickel is very bullish at the moment. If you google on alternate battery technologies then liquid steel and iron looks to me the most probable replacement to nickel for batteries. However high end equipment’s will continue to be powered by nickel containing batteries. Nickel has a long term resistance at $20657. A break of $20657 will result in $25460 and $35017 and more.
Why can gold rise from now and till the end of the month?
1. Traders and investors are always ahead. Traders are now looking at covid vaccination related growth in the UK and Eurozone. Growth differential between the USA and rest of the world will reduce from the third quarter.
2. Higher US economic growth has been factored. This has been reflected by rising bond yields in the first quarter.
3. US dollar Index can fall once the UK and Eurozone and other nations catch up covid vaccinations with USA.
4. Crypto currencies' rise will now negatively affect US dollar and forex markets more than gold and precious metals.
5. There will be short covering if the gold price manages to break and trades over $1770.
Whatever may be the reason to justify a gold price rise or a gold price fall, unless $1770 is not broken there will always be fears of a short term sharp selloff in gold price. I remain bullish on gold in the long term. But I am against higher allocation to gold at the current price in your portfolio.
COMEX SILVER MAY 2021 – current price $2497.00
- Fifty week moving average at $2358.50 is the key medium term support.
- Two hundred day moving average at $2562.00 is the key resistance.
- Silver has to trade over $2358.50 in April to rise to $2562.00, $2608.00 and $3058.00.
- Silver will crash to $2180.00 and $1931.30 if it trades below $2358.50 for five consecutive trading days.
- I will to use any ten percent fall (if any) to invest for the long term with a price target of $3621.80 and $4094.30.
- Day traders, jobbers, short term traders and short term investors need not be hyper bullish on silver.