Investing In Copper: Copper is the perfect investment
The base metal hasn't received nearly the press that its precious peers, gold, silver, platinum and palladium have. But it should.
The reddish metal is one of the most useful on Earth. It is a very efficient conductor of electricity. It is flexible and strong and it doesn't corrode easily. It is used for heating, air conditioning, plumbing, roofing, adapters, computers, cars, mobile phones, wiring, electrical leads, transformers, motors and lighting units.
In short, copper is used in nearly every major industry of the world: transportation, engineering, machinery and equipment, electrical, building, automotive and computer.
Thanks to significant demand worldwide, the base metal has outpaced all of its higher-profile precious peers by a significant margin over the last five years. Spot copper prices are up 393% from their lows in 2001. Meanwhile, gold is up only 151%, silver is up 188%, platinum is up 202% and palladium is up 122%.
Surely, the price of copper has gotten way ahead of itself and are due for a major correction. Right? That's what the bears are saying these days. But the underlying fundamentals in the copper industry paint a different picture. They show a world in which prices will go higher - much higher.
World-famous commodities expert Jim Rogers said there are three questions you need to ask (and answer) to determine if a commodity is headed higher in price: How much production is there worldwide? Are there new sources of supply? And are there new potential supplies?
The perfect scenario for a commodity on the rise is that worldwide production is limited or declining, there are no new supply sources that could boost production in the near-term and there is no viable replacement when prices get "too high."
Based on all three of these requirements, copper is the perfect investment right now.
Investing In Copper: Is Production Limited or Declining? Yes.
Thanks in part to rapid growth in India and China, worldwide copper demand is at an all-time high. From 1998 to 2005, total refined production of copper has gone from 14, 142 k tons to 16, 631 k tons. During that same time period, total refined consumption has gone from 13, 352 k tons to 16, 884 k tons. For the last three years, copper consumption has been greater than the total amount of copper produced. As a result, copper supplies and stockpiles have shrunk to five-year lows and copper prices have skyrocketed from 75 cents a pound to as high as almost $4.
I can not see this commondity falling in the foreseeable furture