Wednesday, September 23, 2009

Copper Bubble?

My last post shows a chart of gold. Gold is difficult to get a handle on because its price was fixed for so many decades. That price was then allowed to roam free. This distorted the long-term trends. Copper does not have that problem though.



Like gold, copper has been a fairly good long-term inflation hedge. The key, as with any inflation hedge, is to buy it at the right price though.

There was a massive unsustainable global construction brought on by amazingly cheap credit in recent years. Buildings and houses use a LOT of copper. That was probably not the best time to buy copper and tuck it away for future use. Of course, we don't know that for sure yet. It's still $2.81 per pound and only slightly below its 2007 price average.

US copper ends down 2 pct on demand worries

NEW YORK, Sept 23 (Reuters) - U.S. copper ended down 2 percent on Wednesday as worries about eroding Chinese demand for the metal made investors look beyond the dollar, whose weakness had helped the market rally most of this month.

Source Data:
USGS Historical Mineral Prices
Historical CPI
at

3 comments:

  1. Stagflationary MarkSeptember 23, 2009 at 9:45 PM

    Bonus article to go with it...

    Analyst: False perceptions driving metal prices higher

    http://www.mlive.com/business/west-michigan/index.ssf/2009/09/analyst_false_perceptions_driv.html

    "The press has done a disservice by confusing stockpiling with consumption. Now, anything that goes on in China gets reported and everybody in the (U.S.) reacts," Reisman said. "It's deceptive demand.

    "If you're wondering why copper doubled since January, it's because of the ETFs. Now that perception is being compared to reality and we'll see what happens."

    ReplyDelete
  2. watchtowerSeptember 24, 2009 at 10:37 AM

    Thanks for the charts!
    When you have a brain like mine it helps to have a chart, I need all the help I can get : )

    ReplyDelete
  3. Stagflationary MarkSeptember 24, 2009 at 11:25 AM

    watchtower,

    This is your brain on charts.

    Any questions?

    I felt the need to do a quick public service announcement. Sorry! ;)

    ReplyDelete