Gold Is Making All-Time Highs, But So Is This Quiet Metal
When it comes to connecting the market’s behavior across different assets, little gets it done, like inflation rates or expectations moving forward. Today, as President Trump's rollout of trade tariffs has caused a major expectation for higher inflation, capital has started to rotate according to these expectations, and it clearly shows in the price action.
Any time investors, in a broader sense, expect inflation to start coming up, gold then becomes the go-to asset in the commodities space to see increased attention, which comes along with buying interest. Knowing this, investors can make sense of the precious metal making new all-time highs nearly every week since the trade tariffs were announced. However, there are some fears that gold is now slowly becoming overextended, making other areas more attractive.
One such area of basic material stocks is copper, another metal making new highs along with gold. However, copper has a connection that runs deeper than just inflation expectations; it is tied to economic activity and expansion as well. This is the reason why looking at stocks like Freeport-McMoRan Inc. (NYSE: FCX) can be a profitable venture, just like the United States Copper Index Fund (NYSEARCA: CPER), a diversified exchange-traded fund (ETF).
The Bull Case for Copper
Whenever an economy begins to show signs of expansion, or at least the expectations for expansion in the coming months and quarters, smart traders and investors tend to invest in copper for a common reason. That reason is that energy infrastructure and most development rely on copper to work.
This is one major tailwind when the market realizes that the United States economy might have to redeploy some resources as the global trade landscape changes due to these new tariffs. Then there’s China. China’s economy has undergone constant stimulus over the past year or so, and those effects are due to kick into GDP activity.
When that activity starts to show, investors will likely see it in the price of copper first, which is why keeping this broader copper ETF in mind is a good idea. The price also shows this benefit, considering that the copper ETF has outperformed the broader S&P 500 index by as much as 19% over the past quarter.
On a technical basis, this momentum is likely to start attracting new buyers, those who use the global macro picture for guidance and ideas.
Freeport-McMoRan Stock: A Top Pick
While the prices of gold and copper have been on a tear lately, shares of Freeport-McMoRan have lagged behind significantly. Today, the stock trades at only 60% of its 52-week high level, creating an attractive risk-to-reward ratio. Most of the worst-case scenarios have likely been priced into the stock already, leaving investors with all the upside.
To understand the other side of this equation, investors can look at where Wall Street analysts think Freeport-McMoRan stock could be headed. As of April 2025, this company's consensus price target is $48.4 per share, calling for as much as 47.1% upside from its recent lows.
There is also a potential arbitrage play when it comes to Freeport-McMoRan stock as well, considering that Wall Street earnings per share (EPS) forecasts haven’t really moved as the price of both gold and copper start to trend higher. Analysts forecast up to $0.45 in EPS for the second quarter of 2025, a jump of 25% from today’s reported $0.36 in EPS.
Considering that the company’s earnings are mainly driven by the market price of gold and copper, it makes sense for investors to expect an earnings beat in the coming quarters or at least a higher revision for EPS forecasts coming out of Wall Street. This might drive even more upside in the stock.
An Honorable Mention Tied to Copper
Investors should consider uranium as the price of copper starts to trend higher as a function of expected economic activity in the world’s leading nations. Given that both the United States and China have hinted at an interest in developing nuclear energy sources, copper could be the canary in the coal mine.
With economic activity and infrastructure expansion, the speculation spills over to this other element, and it shows in the way Wall Street analysts are looking at shares of Cameco Co. (NYSE: CCJ) today, placing a consensus price target of up to $70 per share, representing up to 70.3% upside from today’s price.
Knowing that this energy sentiment and its spillover are imminent, short sellers have also decided to step away from the table over the past month, judging by the 2.2% decline in Cameco’s short interest despite seeing one of the most volatile months in S&P 500 history.
Just like Freeport-McMoRan, Cameco stock offers an attractive risk-to-reward setup. The stock now trades at a low of 66% of its 52-week high, leaving investors with most of the upside and very little downside in this company.
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