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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 07/13/2009 : 12:49:20
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If the US economy continues to flounder, who will buy our copper? This story to me proves a point that it is possible that the world economy will go on with or without us and that copper demand does not have to grow in the US for copper prices to rise:
China’s passenger car sales rose 48 per cent (compared to last June):
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Country
1000+ Penny Miser Member
USA
3121 Posts |
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dakota1955
1000+ Penny Miser Member
2212 Posts |
Posted - 07/13/2009 : 20:33:21
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| I believe that China would they not happy with our dollars right now |
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jonflyfish
Penny Hoarding Member
USA
693 Posts |
Posted - 07/13/2009 : 20:49:35
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| There is plenty of copper on this planet. That is not an issue. Any global economic downturn would not bolster copper and other industrial metals. Nobody cares about metal when they need a cup of rice. The real issue for copper is the pending currency crisis. When the currency collapse comes, you'll be thankful that you paid so little for something so valuable. |
The first panacea for a mismanaged nation is inflation of the currency; second is war. Both bring a temporary (and false) prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunities. |
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mingusdew
Penny Sorter Member
64 Posts |
Posted - 07/16/2009 : 10:43:09
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IMHO, jonflyfish nailed it. I hang on to my pennies in the event inflation gets out of control and I need a stockpile of physical, "real" money to trade for eggs, bread, and vegetables at the local farmers market. Unless you manage to corner the market, or at least position yourself somewhere within a high-volume distribution channel (preferably dealing only through paper contracts, without the burden of any heavy metal!), you won't get rich off copper. With all the variables effecting prices, you're practically guaranteed to miss something when trying to predict its future.
There's a whole lot of recyclable copper out there in the wild, and if prices ever get going high enough to call much of it back en masse I'd imagine it could trigger a significant shift in supply/demand. I wouldn't want to own shares in the mining companies if/when it comes to this. The time leading up to it would be a different story, but you'd want to pay close attention to the timing of everything to find the best chance to bail. Not an easy game to play.
With cable/telecom companies switching to fiber, what's going to be done with all that old copper wire they intend to replace? Probably scrapped and recycled. On top of that, they won't be replacing it with more copper wire. What about the estimated hundreds of thousands of tons of copper pennies out in circulation? If the melt ban gets repealed, and these pennies start flooding the open market, it could result in downward pressure on the going spot price.
As a slightly related aside, I like stocks in recycling companies for the mid-long term, say the next few years, for this very reason. If you are looking for a way to trade an inflationary panic in metal prices, look at the recyclers, not the miners. Much higher upside. We've been draining the mines for decades, building oversized cars and running millions of miles of TV cable lines that are rapidly becoming obsolete. Companies with the infrastructure to refine these back into raw materials will be in high demand IMO.
Bottom line, my WAG is that inflation will no doubt drive the price of copper higher, and this will trigger a rush to scrap as much of it as possible (much like last year when people were tearing down live power lines), but it will have no bearing at all on global industrial demand. Once this is realized by the people holding all the processed scrap they can't sell, prices will flatline. China has already been stockpiling at low prices, why would they want to buy more in an inflationary panic?
I hold physical copper as a barter in the event of a "worst case scenario" collapse of the global economy as we know it, but to hedge against inflation and/or a generally declining US economy and standard of living, I invest my money elsewhere.
Edit to add: Even though I think copper prices will flatline after high prices flood the market with mined metal and an unprecedented amount of refined scrap, I still think they'll be higher than they are now. That doesn't mean I think copper itself will be worth more though. It will just be priced in terms of a weaker dollar. |
If you could kick the person in the pants responsible for most of your trouble, you wouldn't sit for a month.
-Theodore Roosevelt
Fortune favors the informed. |
Edited by - mingusdew on 07/16/2009 10:51:57 |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 07/16/2009 : 12:39:39
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When/if the US dollar collapse, everything will "appear" go up but at different rates. So if copper demand remains low and the dollar collapses, you will be happy to be holding copper instead of dollars, but at the same time a loaf of bread could continue to get more expensive when priced in coppers.
In essence just about everything tangible will be an inflation hedge, but some things will be better hedges than others. In that sense copper demand in China and else where outside of the US is essential to insure that copper is not only an inflation hedge but one of the better inflation hedges. (US demand for copper will be crushed if the dollar collapses as our economy will basically flatline for a while until a new currency system is put into place.)
IMHO |
Edited by - horgad on 07/16/2009 12:39:57 |
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Future of Copper
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