Jim Cramer Saw Copper Reaching $100, Yet One Trader Bought the Drop

Copper is mapped toward $100, but the key $75.74 breakout level failed quickly: Freeport-McMoRan (FCX) closed at $75.74 on Aug. 31 and slid 4.2% to $72.56 by Sept. 3, with the stock down 6.66% over the past week. The bullish case remains supported by FCX’s Q1 2026 results (adjusted EPS $0.57 vs $0.47 expected; realized copper price $5.78/lb vs $4.44 a year earlier) and guidance that rising demand requires additional supply, while the trade’s “kill switch” is tied to a September–December rate-hike scenario. The article also highlights sell-side price targets around $72.05 (already exceeded) and two watch items—Freeport’s Grasberg ramp and Fed policy—driving an overall mixed, conditional outlook.

Analysis

This is more a duration-and-policy trade than a clean copper bull case. FCX has the best operating leverage in the group, but the failed breakout tells you the market is already crowded on the electrification narrative; near-term upside likely needs either a lower entry or a hard confirmation that copper can hold its recent price band. The real catalyst over the next 1-3 months is not a price target, but whether the Fed stays on hold and whether copper inventory draws are broad-based rather than just one-off headline-driven buying.

Second-order winners are the picks-and-shovels names tied to grid buildout, cable, and electrical infrastructure, while the losers are downstream users that cannot fully pass through input costs: equipment OEMs, industrials with thin gross margins, and any EV/AI capex story that already assumes cheap copper. If this move extends, scrap flows and aluminum substitution will start to cap upside, which means the trade can work in stock terms even if the commodity itself stalls. That argues for trading FCX as a relative momentum vehicle, not as a structural commodity call.

The contrarian miss is that rates may matter more than “copper scarcity.” A hawkish surprise would compress multiples across miners and also hit gold-beta names like AEM, while a dovish pivot would re-ignite the whole complex. Structural supply tightness remains real, but the 6-18 month supply response path means today’s price still depends on macro liquidity; if FCX loses the low-70s and copper fails to hold the current realized-price zone, the thesis is probably just a crowded narrative trade, not a new regime.

Key Decisions for Investors

• Tactically buy FCX only on weakness or a reclaim of the 75 area; target a retest of the prior highs over 1-3 months, but cut risk if FCX loses the low-70s on closing basis.
• Use a relative-value pair: long FCX / short AEM or GDX to express copper-over-gold if rates stay stable; this should outperform if the market keeps rewarding electrification over real-yield hedging.
• If you want convexity, consider a 3-6 month FCX call spread rather than outright shares; the key risk is that a macro hawkish shock can compress the whole complex before the copper thesis matures.
• Set an alert on any September/October/December hike language or a meaningful move higher in real yields; that would be the clearest falsifier for the broader hard-commodities trade and a reason to reduce exposure.