Paulo Macro — Anatomy of a Breakout: A Look at Copper
"Call it the Broadening Out but in commodities. I think copper is about to roar." How the 2004 oil breakout confirmed itself — and why the copper curve is now doing the same thing.
One-line take: A framework note. Paulo uses the 2004 crude breakout (out of a decades-long $10-$40 range) as the template for how a commodity confirms a real breakout: the futures curve moves toward backwardation and — more importantly — the entire curve inflates, including the long-dated price. He argues LME copper is now doing exactly this after two decades stuck under ~$10-11k/t, even as copper has "gone invisible" behind gold/silver's run and looks well-supplied on headline exchange inventories. His tell: back Comex out of global inventories and RoW stocks are at levels seen only in the 2004-08 China bull and the 2021-23 Western-demand run; Chinese liquidity is stabilizing; Comex contango has halved. Depressed copper/gold and copper/silver ratios have historically marked great copper entries. His expression: copper juniors that majors will consolidate in the coming M&A wave — sizable positions in Aldebaran (ALDE) and Taseko (TGB). Back-filled post (predates the source's other archived notes).
1. Stocks & names mentioned
| Ticker | Name | Research | View | What's said | Source |
|---|
| ALDE | Aldebaran Resources | SA · STK | Positive | Named as one of two "sizable positions" expressing the copper-breakout view via juniors that majors will consolidate in Phase 2 of the mining bull. ALDE.CN — "first PEA expected any day" (the PEA that lands the following month; see the Nov-26 note). | read ↗ |
| TGB | Taseko Mines | QT · SA · STK · FA | Positive | The second named "sizable position" — a BC-based copper producer/developer, his other preferred junior expression of the copper-breakout thesis ("there are several others on a short list that have my interest"). | read ↗ |
| FCX | Freeport-McMoRan | QT · SA · STK · FA | Neutral | Reference, not a stance: Freeport's force majeure at the Grasberg mine is cited as the recent copper headline that copper has "oddly gone invisible" behind — a supply event the market is under-reacting to. | read ↗ |
ALDE is a CSE/TSXV-listed junior (OTC: ADBRF), so it carries SA/STK only; Taseko (TGB) is NYSE-American-listed. "View" reflects how each name was framed in this note (Positive = a held junior expressing the copper view; Neutral = a cited supply headline). Copper itself is a commodity/future, not a security, so it is discussed but not tabled. Written post — no video, so the "Source" links open the Substack note. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
2. Talking points
The 2004 oil breakout — the template
- Crude traded for decades in a ~$10 floor / $40 ceiling range; it finally broke out in mid-2004 amid a "catching fire" China story that most of the market ignored — the price was "oddly invisible."
- What confirmed the breakout was the oil curve: progressive 2003-05 peaks showed the curve increasingly backwardating (near-dated above far-dated — punishes storage carry, calls inventory out) and, more importantly, the entire curve inflating, including the long-dated price.
Copper is doing the same thing now
- Copper has meandered for two decades under a ~$10-11k/t ceiling. LME copper curves are now evolving like 2004 oil — approaching backwardation on each breakout attempt (ex the 2024 Comex squeeze) with the long-term price inflating along with the curve (long-dated ~$10,500/t, ~$4.75/lb).
- Sell-side long-term price decks (Wood Mackenzie, S&P Global, consensus) are still "marked to market" in the same $10-11k range — missing an EM growth inflection over the next ~18 months on global easing, a weaker USD impulse, and Chinese liquidity.
China is the swing factor — and it's stabilizing
- Copper vs 10yr Chinese yields broke down in Nov-2020 (Ant IPO suspended, property collapse began); copper's Covid recovery became a Western/US-demand story (tracking US 10yr breakevens).
- Since late-2024 copper has diverged higher from breakevens — Trump elected, Chinese yields bottomed. The driver shifted to tariff-driven supply-chain disruption + a stabilizing China pivoting to RoW exports. "Inventories leave the footprints."
The inventory tell — back Comex out
- Headline global exchange inventories are near multi-year highs, so copper "looks well supplied." But tariffs pulled metal into Comex (front-running US premiums), and it isn't leaving given unpredictable trade policy.
- Back Comex out (LME + Shanghai − Comex) and RoW inventories are at levels seen only in (1) the 2004-08 China bull and (2) the 2021-23 post-Covid Western-demand run. Metal is "in the wrong place."
- Corroborating: LME fronts flirting with backwardation; Comex's steep May contango (18c max, 2m-5m) already cut in half despite the inventory glut.
Copper is "invisible" vs precious metals — the ratio signal
- Gold and silver have run hard; copper has badly underperformed. If you fear gold stalling, "unless you can make a compelling bearish argument for copper," the gold/copper ratio should inflect higher — and past inflections from such depressed levels preceded strong copper moves.
- Same for the copper/silver ratio: stabs lower (ex the 2011 silver blowoff) were "excellent moments to grab copper and hold on." "Call it the Broadening Out but in commodities."
How he expresses it — juniors into the M&A wave
- Preferred expression: copper juniors that majors will consolidate in the coming M&A wave of "Phase 2" (per The Three Phases of a Mining Bull). This supercycle is supply-constraint / "Rolling Crackups" driven, not a China demand-push like the 2000s.
- Sizable positions in Aldebaran (ALDE.CN) — first PEA "expected any day" — and Taseko (TGB), with "several others on a short list."
3. In plain English
A jargon-free summary of the thesis behind each name — what it actually is and why that view. (Plain-language companion to the table above; renders on each ticker's consolidated page.)
ALDE — Aldebaran Resources Positive
Aldebaran is a small Canadian company ("junior") developing a large copper-gold deposit in Argentina. Paulo's whole copper trade is: copper is quietly setting up for a big move, and the cleanest way to profit is to own cheap junior developers that the big miners will eventually buy out in a wave of takeovers. Aldebaran is one of his two largest such positions here, flagged just before it published its first economic study of the mine (the PEA that lands a month later).
Why juniors and not the metal itself? Because if copper re-rates to a higher long-term price, a proven, buildable deposit owned by a tiny company can be worth a multiple of today's share price to an acquiring major — that's the "torque" he's after.
TGB — Taseko Mines Positive
Taseko is a British Columbia copper miner/developer — the second of the two "sizable positions" Paulo names as his preferred way to play the copper breakout. Same logic as Aldebaran: rather than trade copper futures, own producers/developers geared to a rising copper price, positioned to be consolidated as majors chase growth in the coming M&A wave.
Key points extracted from the paid Substack post (in transcript.txt) for personal study. Not investment advice. © Paulo Macro for source material.