Caravel Minerals (ASX:CVV) share price surges 1400% in a year. Here's why

The Caravel Minerals (ASX:CVV) share price has seen an amazing 1,467% return on investment over the last year. Click on to find out why.

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The Caravel Minerals Ltd (ASX: CVV) share price has been a proverbial gold mine for investors. Over the last 12 months, shareholders have seen an amazing 1,466.67% return on investment (ROI) in the company.

Just today, shares in the company were up 23.68% before being placed in a trading halt. Before the suspension, shares in the company were trading for 23.5 cents each. The S&P/ASX All Ordinaries Index (ASX: XAO), by comparison, ended the day down 0.12%.

Let's take a closer look at the incredible rise of the Caravel Minerals share price. 

What's going on with the Caravel Minerals share price?

The Caravel share price has been going gangbusters over the last year.

Caravel, being a copper-based company, unsurprisingly sees its fortunes rise and fall with that of copper. Well at the moment, copper is rising.

Over the past 12 months, the twenty-ninth element's price has increased by 85.87%, according to Trading Economics. Just from the beginning of this year, the metal is up 16.57%. It currently sells on the commodity market for US$4.103 per pound.

Only one week ago, Caravel announced "significant" copper deposits had been found at its Bindi deposit in Western Australia.

A week prior to that announcement, the company declared it was exploring an area in south-west WA with high chances of "massive sulphide-hosted nickel-copper-platinum group elements…"

Copper's price is seen by many analysts as indicative of the general mood of the economy. As the COVID-19 pandemic subsides and confidence rebounds, the economy is tipped to do well in the near-term.

Another factor influencing the copper price is supply and demand. Many Latin American countries are seeing ongoing supply issues because of the pandemic. As well, there is a bill in the Chilean Congress to increase royalties on copper miners. South America is one of the largest copper producers on the globe.

As well, copper (along with lithium and some other metals) is essential in the production of climate-friendly technologies. Demand for zero-emissions tech, such as electric cars and solar panels, is soaring as governments and industry alike look to combat man-made climate change. As supply contracts and demand increases, this inevitably leads to a price rise. In economics, this is known as the law of supply and demand.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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