Copper and Base Metals

[DemonD]

We all know gold and platinum do well when there is a loss of confidence in fiat moneys.

What about other commodities that are more industrial in nature? In a hyperinflation scenario it would seem that all "real" assets would tend to track gold higher, although maybe with not as much stored value as gold and silver (both which may be used as actual currency in a nuclear scenario).

All the base metals have been tracking higher with gold and platinum the past 6 years... would this continue with the other metals? Or would a falloff in industrial demand keep prices depressed...

Looking for the itulip community's collective wisdom on this one..

[Spartacus]

Re: Copper and Base Metals

Strange you should mention this right now.

Frank Veneroso has an article out there claiming base metals (including Copper, Aluminum, Nickel, Platinum, Palladium and Silver) will fall because the hedgies have taken way outsized positions, forcing the prices of the commodities to rise enough for the producers to start churning out more - we'll get into an oversupply situation soon.

Gold will act in its traditional role as money and flight to safety role and actually go up.

I'm not so sure about Silver and Platinum - Silver especially seems to shadow every move in gold (excepting the lowest-amplitude, highest-frequency "noise" moves).

[spunky]

Re: Copper and Base Metals

Silver is win win ,now. Look back and see that silver has been following gold , in an near exact trading pattern for about 45 days. I cant remember exactly when this started or the exact amount of days, you can see the charts at Kitco. Uranium is another one that should take off. Base metals I dont know :confused:

[Spartacus]

Re: Copper and Base Metals

except that Silver moves in larger multiples than gold.

So gold will be up 1% and Silver will be up 1.2%

(to balance out this optimism, note that on the downside Silver seems to drop by even larger multiples).

Silver is win win ,now. Look back and see that silver has been following gold , in an near exact trading pattern for about 45 days. I cant remember exactly when this started or the exact amount of days, you can see the charts at Kitco. Uranium is another one that should take off. Base metals I dont know :confused:

[grapejelly]

Re: Copper and Base Metals

I can see how a perception that the world economy, China, the US or Euroland is entering a recession could cause base metals to plummet.

Simultaneously, the CBs will be trying to inflate like crazy to prevent a deflationary collapse. As they have been doing for awhile now.

A flight away from currencies could result in a mania for tangibles especially gold and silver, but including non-monetary metals and probably every other type of tangible.

This would be a flight of real savings and not leveraged credit bets because the banks wouldn't be making those types of leveraged loans to the hedgies anymore due to one or major bank bailouts.

So although intially the base metals would fall hard, I think they could do well from flight capital and could reach untold heights.

OTOH, perhaps only gold and silver will receive that flight capital and all other metals (possibly except platinum, possibly not) will fall in real terms quite dramatically on fears of or an actual Chinese, US, Euroland or global slowdown.

I wouldn't take the chance, myself. I would stick to gold and silver for purposes of investment right now.

[WDCRob]

Re: Copper and Base Metals

I can see how a perception that the world economy, China, the US or Euroland is entering a recession could cause base metals to plummet.

Simultaneously, the CBs will be trying to inflate like crazy to prevent a deflationary collapse. As they have been doing for awhile now.

A flight away from currencies could result in a mania for tangibles especially gold and silver, but including non-monetary metals and probably every other type of tangible.

This would be a flight of real savings and not leveraged credit bets because the banks wouldn't be making those types of leveraged loans to the hedgies anymore due to one or major bank bailouts.

So although intially the base metals would fall hard, I think they could do well from flight capital and could reach untold heights.

That's pretty much what EJ's postulating will happen under Ka-Poom. There's a vid somewhere with him talking of gold at 2500-3000 IIRC.

[Finster]

Re: Copper and Base Metals

We all know gold and platinum do well when there is a loss of confidence in fiat moneys.

What about other commodities that are more industrial in nature? In a hyperinflation scenario it would seem that all "real" assets would tend to track gold higher, although maybe with not as much stored value as gold and silver (both which may be used as actual currency in a nuclear scenario).

All the base metals have been tracking higher with gold and platinum the past 6 years... would this continue with the other metals? Or would a falloff in industrial demand keep prices depressed...

Looking for the itulip community's collective wisdom on this one..

Gold, platinum, silver, and copper (as well as some others to one degree or another) are all monetary metals. They have a significant history of use as money. They are also, to one degree or another, industrial metals, having uses in manufacturing, transportation, construction, etceteras. Use in jewelry arguably straddles the fence, because it is not actually a monetary use, but it turns out that use in jewelry seems to correlate with use in money.

So the real question is to what degree are they monetary or industrial? Gold is probably the most monetary - least industrial of the four metals. Copper is probably the most industrial. Silver and platinum would fall between, with silver coming after gold monetarily and platinum after copper industrially.

You also have a "concentration" factor ... platinum tends to be the most concentrated in terms of value/mass, with copper at the other end of the spectrum.

Since all four have monetary value, but may behave somewhat differently, any investor with a decent sized portfolio concerned about inflation or potential hyperinflation can benefit from holding bullion in all four.

[c1ue]

Re: Copper and Base Metals

A number of the more militant newsletters have been pointing out that gold may not be as good an investment as in the past with regards to inflation hedging.

The reason is that there are gigantic opposing hedges in place.

This may be why some individuals have been postulating that investments in commodities without derivatives is better.

The relative silver behavior may be another sign - the industrial usage of silver would make it much harder to achieve the same relative damping effect as silver trading volume is not purely due to investment.