Is Copper Going to Be the Next Gold?
Is copper going to be the next gold? Some people say yes — including the world’s biggest gold mining company.
Gold is breaking records in terms of price but it may be copper that wins the prize. In a surprise move, the top gold bullion producer in the world, Barrick Gold Corp., recently bid for copper miner Equinox Minerals. The $7.68 billion offer topped one made by Minmetals Resources, a division of the largest metals trader in China. It seems skyrocketing global demand for the industrial metal is having widespread effects.
On Tuesday, Minmetals announced that it could not compete with the Barrick offer and took its hat out of the ring. Barrick’s move to become more diversified highlights the positive demand forecast for industrial metals. Gold Matrix Resources Managing Director Pinaki Rath revealed that over the long-term, base metals have positive prospects. “Perhaps copper is the new gold,” he stated.
Industrial demand for copper from China and other emerging economies would continue to support prices. China alone consumes 40 percent of this industrial metal, approximately eight million tons. Conductivity and ductility are two aspects that make this metal an essential component of electric products, tubing, and wiring.
Standard Charter Bank Analyst Judy Zhu says the three-year outlook for copper is very bullish. She stated that even under conservative demand estimates, the market will stay in deficit during that period. If demand rises faster than anticipated, the deficit may last even longer, perhaps up to 20 years, Ms. Zhu reported.
The Lumwana mine located in the Zambian belt is the prime asset of Equinox. In 2010, it produced approximately 147,000 tons of concentrate, which represents one percent of global mine supply. Barrack will more than double its output of the industrial metal through this acquisition. Forecasters generally seem to be bullish on the metal over the next five years.
Don’t get me wrong — I’m not saying you should rush out and put your money into copper or even copper stocks. I do, however, think copper prices and stocks in the next few months will probably increase — but prices are potentially in a bubble that could burst when China’s inflationary bubble finally bursts as well.
Here’s a good article on the same topic from a few months ago.
Remember to check out our copper stocks and copper prices websites for more news and editorials on copper companies, stocks, and price predictions.
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