Is copper the new gold child of the metal group?
Gold futures opened at $ 1901.60 this morning; it is currently down $ 3.10 and trading at $ 1895.80. There is no doubt that gold remains the main precious metal that provides a hedge against inflation. Gold has the same purchasing power as it has over the past 100 years.
To elaborate, if you had a $ 20 gold coin or a $ 20 bill (redeemable in gold) in 1910, you could use either the gold coin or the $ 20 bill to pay for a room in the house. Plaza hotel in New York, by a new suit and have a steak dinner. Today, with the same $ 20 bill, you’d be hard pressed to buy just the steak dinner. However, a one ounce gold coin is worth around $ 1900. With $ 1900, you can still buy a costume, stay at the Plaza for a night, and dine with a steak. In other words, the purchasing power of gold has not changed over the past hundred years; however, the dollar has devalued considerably as inflation devastated the purchasing power of our fiat currency.
Because of this stable purchasing power, gold will never lose its luster or its appeal as a safe haven asset. It is for this reason that gold will always be a core asset in the safe haven group.
However, as a purely speculative trade or investment, you might want to take a look at copper futures. The price of copper more than doubled from $ 2.00 per pound in mid-March 2020 and traded at a new high on May 10 of $ 4.87 per pound, causing the value of 143.5%.
More so, several analysts are forecasting much higher copper prices this year and the first quarter of 2022. Bank of America commodities strategists forecast copper prices to hit $ 5.87 a pound by the end of the year. of the year. Recently, Michael Widmer, commodities strategist at Bank of America, said stocks measured in tonnes are now at levels seen 15 years ago. He predicts that copper could reach $ 13,000 per metric tonne, or about $ 5.89 per pound. He also predicts that copper could reach $ 20,000 per metric tonne by 2025. That would bring the price of copper to just over $ 9 per pound.
“The world is at risk of running out of copper” amid rising supply and demand deficits, Bank of America said, and prices could reach $ 20,000 per metric tonne by 2025.
“If our expectation of an increased supply of secondary materials, a non-transparent market, did not materialize, stocks could run out over the next three years, causing even more violent price swings that could carry the red metal. above $ 20,000 / t ($ 9.07 / kg). ”
David Neuhauser, Managing Director of US hedge fund Livermore Partners, said: “I think copper is the new oil and I think copper, for the next five to 10 years, is going to be huge with a potential of $ 20,000. per metric ton.
While copper will never replace the safe haven benefits of gold, and as such, gold should remain an essential and integral part of a diversified portfolio. At the same time, copper could be one of the most lucrative speculative investments over the next three years.
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Wishing you, as always, good transactions,
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.