Copper (I know it is not a PM)

[69mach351]

I was just wondering if anyone buys/invests in copper, even on a minimal level. It is quite a bit cheaper than any other metals that most discuss here. It probably would take quite a bit to make worthwhile, which may make storage an issue, but it is a necessity in many industries, and like anything else it is a finite resource. Just curious to hear everyones thoughts. The places I have seen that sell it are near twice the spot price.

 

[ancona]

Copper is not a monetary metal, however it is a strategic one. The trouble with copper is that in a short amount of time it can plunge by 50% or more. Demand hinges entirely upon world demand for new electrical items and homes. If demand drops then the need for large quantities copper declines as well. My firm just completed salvaging an enormous amount of copper wire and feeder cables from a demolition project, which means I watched the spot market very carefully. My broker at TMR dropped my bare-bright price three times during the project citing falling demand abroad. The domestic market for copper from producers has fallen dramatically since late '08 and never really recovered. Nearly all the recycled copper from the US ends up in Asia.

 

[rblong2us]

Is there a bottom price that would have you sit on the recovered copper Ancona ?

Either just waiting for an up move, or even perhaps with the mindset of a long term stacker ?

 

[DCFusor]

What goes down can also go up, I trade copper and related companies all the time (though not as much lately - however, I think I see a bottom forming soon and prefer the long side trades generally). I also have what amounts to a pretty huge stash of the metal in various useful (to me) forms that has appreciated hugely since some of it was bought - even at today's price. I must own a ton of the stuff, at least.

Ancona's case was "special" - in effect, he was a forced buyer of copper at one price, and had to sell it later after the price had moved down, could have been a cash flow issue or just no place to store it all till the price was more favorable.

Funny thing, the same could apply to the "real" PMs. We see for example gold getting hammered now and again due to margin calls on people who wound up having to sell their gold quick to raise cash for some other obligation. Yes, I know about the manipulation too, but not every move is due to that alone.

 

[69mach351]

What are some better ways to buy it (aside from sitting outside of the recycler)? I am not looking at huge amounts, just a little if I bought some silver or something as well. Provident has it, but in the bar form it is $6.xx a lb. Its spot price is in the mid-$3 range last I checked.

 

[mmerlinn]

One potential problem with copper is that because it is a strategic metal, if there is a war it could be confiscated if known that you have it. At the least, you could only sell it at the government set price, not the market price.

Otherwise if you can withstand the volatility and have secure storage, there is a fortune to be made in copper. Best way is to buy/accumulate as the price drops and sell off bits and pieces as the prices rise. Copper usually has two ups and downs every year, a large one going into the spring, and a smaller one in the fall.

Annual high price for copper is usually within two weeks of Easter every year. Low price is usually in December. Before you start spending money, take a good look at annual charts to determine best buy points or you will wind up buying at the highs and selling at the lows, a perfect way to lose money.

 

[69mach351]

Good information. I am just learning about this (as well as PM's). I appreciate the feedback!