WHY COPPER WHY GOLD?
Why Invest in Copper?
According to the Commodities Research Unit, the leading independent authority for the world of metals and mining, power and cables, fertilizers and chemicals, copper demand is predicted to triple by the year 2030.
In the last year, copper prices on the London Metal exchange have doubled. In addition, Reuters and other forecasters expect that copper will extend its bullish streak in 2010. China, the world’s largest copper consumer, expects global prices of the metal to strengthen in 2010 and beyond.
Copper plays an important role in modern technology. It is widely used in construction, electronics and automobiles and the price is closely tied to economic activity. For example, copper wire and cable transmit power and information. It is used in plumbing systems for potable water, and in products with architectural and industrial applications.
Copper is arguably the most important non-ferrous metal on Earth. It was the first metal used by man with documented use of native copper in 8700 B.C. Copper is a soft, reddish metal, 31st most abundant element in the Earth’s crust, with a density less than half and a melting point slightly higher than gold. It is the third most used industrial metal behind iron and aluminum and is valued for its malleability, ductility, corrosion resistance, and high thermal and electrical conductivities.
Copper also was the first metal alloyed and it ushered in the Bronze Age over 6000 years ago. Bronze, for those pyro-metallurgically challenged, is a fire-made combination of copper originally combined with arsenic and gradually succeeded by tin in the period from 4000 to 3000 B.C.
Copper alloys such as bronze (12% Sn), brass (10% Zn), and beryllium copper (4% Be) have very important industrial uses today. Other minor copper alloys include aluminum, silicon, phosphorous, and manganese.
However, it is mostly in its native form that copper is essential to the industrialized world. The modern history of copper began with development of commercial electricity in the late 19th century. It is a better electrical conductor than any other metal except gold and silver, which are too expensive to use for infrastructure distribution and wiring. To put it simply, electrical power does not flow on Earth without copper.
Electrical uses account for nearly 75% of total copper demand. Billions of people in the emerging countries of the world, most importantly China and India, are demanding electricity. Of the 6.8 billion people inhabiting Earth, 2.5 billion or nearly 37% live in these two Asian countries. These very large countries will require uncountable kilometers of electrical cable and wire to hook their teeming masses to the grid.
The worldwide consumption of copper has grown at a 4% annual rate since 1900. There is abundant reason to think steadily increasing demand will continue as electrical power is supplied to emerging countries throughout the world and particularly in eastern Asia.
Why Invest in Gold?
According to the BlackRock Group, the gold market had a strong opening to the year 2010. Gold bullion prices rose as a result of US dollar weakness, which encouraged investment flows into the commodities sector as a whole. Gold has also been helped by firmer crude prices.
In 2009, gold prices rose 27%, making it the ninth-consecutive calendar year of positive returns. And according to the BlackRock Group, a trend is statistically more likely to continue than to end and gold’s fundamentals support this prediction.1
The Central Bank of India has recently purchased 200 M Tonnes of gold. As a result, India’s gold reserves increased to over 6% of its total currency assets.
Gold, although often used in jewellery, also performs critical functions in computers, communications equipment, jet aircraft engines, spacecraft, and a multitude of other products. In addition to gold’s important roles in industry and the arts, it retains a unique status among all commodities as a long-term store of value. Until recent times, it was considered essentially a monetary metal, and most of the bullion produced each year went into the vaults of government treasuries or central banks.2