Deadly storms in Chile disrupted copper mining operations. Prices went up. Strategists called this "further strain on global supply." They said it like they predicted it.
They did not predict it.
Here's what happened. Rain fell. Mines closed. The same mines that produce a third of the world's copper stopped digging holes in the ground. Supply tightened. Prices rose. Every technical indicator I use said absolutely nothing about Chilean weather patterns because charts don't have a "storm" button.
Retail traders are now panic-buying copper futures because they read one headline about supply squeezes. They think they're Michael Burry spotting the housing crisis. They're not. They're buying a commodity they can't pronounce in a country they can't locate on a map during a weather event they didn't know was happening until CNBC told them.
The fundamentalists will tell you this matters. "Copper is essential for electric vehicles and renewable energy infrastructure," they'll say, adjusting their glasses like they just solved cold fusion. They'll mention China's demand. They'll reference historical supply shocks. They'll build you a DCF model that accounts for precipitation in the Atacama Desert.
None of it will help you time the top.
The storms will pass. The mines will reopen. Prices will do whatever they were going to do anyway, which has nothing to do with your position and everything to do with forces you can't control, predict, or understand. But sure, load up on $COPX because it rained in South America. That's a trading thesis. Write it down. Frame it. Show it to your kids when they ask why they can't afford college.
The real supply squeeze is watching traders try to explain why they bought copper at the exact moment everyone else panic-bought copper.
Photo by Money Knack on Unsplash
Leave a Comment