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A Sustained Copper Rally Could Benefit the DBB ETF

Invesco DB Base Metals Fund (DBB) DBB YTD Performance

The potential of a Democratic "blue wave" is buzzing within the capital markets and a recent Kitco News article noted that the "Democrats stimulus plan will be positive for gold, but it will be extremely positive for copper, said John Thomas Steen, associate professor at the University of British Columbia's mining school."

"On Friday Steen joined Kitco Roundtable to discuss stimulus, renewables and the electrification of everything, and the knock on affect on metals, chiefly copper and nickel," the article noted further. "Steen was joined by correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae. Republican and Democrat leadership are negotiating COVID-19 stimulus package in excess of $2 trillion. President Biden is ahead in the polls, which could tilt the eventual stimulus to policy goals favored by Democrats."

"A Biden win is extremely positive for copper. The estimated cost of preparing the electricity grid in the U.S. ... is about a trillion dollars. That's a huge stimulus, but it's a wicked amount of copper," said Steen.

The mining sector is already preparing for an increased demand in copper, the article noted.

"Big miners like Rio Tinto and BHP Billiton are preparing for future copper demand," the article said. "In the spring the number two gold miner, Barrick Gold, said it is on the hunt for copper deals. Earlier this week Newmont's Tom Palmer told Reuters that copper will account for up to one-fifth of the metal produced by the end of the decade given its current project pipeline."

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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