What's Up With Copper?
There is an old saying in the investing world in regards to figuring out which way the economy is going to go. That saying is that a person should always watch the price of copper because copper is the first metal to fall in price when there is a recession coming and the first to rise in price when times are getting good. Of course this saying goes back to when everything was related to housing because copper was a big component of the house from wiring to plumbing.
Now this has me wondering a bit because from all the news of shut downs and lock downs with covid and the hiccups in the supply chains, one would start to think that we are headed into a recession of some kind. There are numerous analysts that are talking not only a recession but full blown depression that will be brought on by a housing crash in the US because so many people are behind in mortgages and rent and thousands of small business's going belly up. There are millions around the world who do not have jobs and have a very bleak outlook on the future. So if this is the case, why is copper hitting yearly highs?
It's not just copper, lumber prices have more than doubled this year. Yes, I understand that a lot of saw mills have been closed because of covid but my question is where is all this high priced lumber going? My conclusion is of course certain places in the US and China where it is most likely business as usual.
Now I have been told by a personal friend that Arizona is seeing a building boom due to the mass exodus of people leaving California, Oregon and even Washington state. Houses are seeing bidding wars and business from California are moving in droves to get away from the crime and riots and also the high taxes. This would account for the lumber increases to a large degree and to some degree copper increases. But one of the real reasons for copper to be going up in prices is due to it's medicinal properties.
You see since this covid issue started there has been a new rush to find a cure. Of course listening to main stream news it's all about a cure and a vaccine but behind the scenes there is a lot of talk about things like prevention and copper is one of those things being talked about. How much you ask? Well actually quite abit. You see good ole copper is once again being sought after for it's medical properties. These properties include things like being anti-bacterial, anti fungal, anti viral and much more. From the website the US National Library Of Medicine it says:
Bacteria, yeasts, and viruses are rapidly killed on metallic copper surfaces, and the term "contact killing" has been coined for this process. While the phenomenon was already known in ancient times, it is currently receiving renewed attention. This is due to the potential use of copper as an antibacterial material in health care settings. Contact killing was observed to take place at a rate of at least 7 to 8 logs per hour, and no live microorganisms were generally recovered from copper surfaces after prolonged incubation. The antimicrobial activity of copper and copper alloys is now well established, and copper has recently been registered at the U.S. Environmental Protection Agency as the first solid antimicrobial material. In several clinical studies, copper has been evaluated for use on touch surfaces, such as door handles, bathroom fixtures, or bed rails, in attempts to curb nosocomial infections. In connection to these new applications of copper, it is important to understand the mechanism of contact killing since it may bear on central issues, such as the possibility of the emergence and spread of resistant organisms, cleaning procedures, and questions of material and object engineering. Recent work has shed light on mechanistic aspects of contact killing. These findings will be reviewed here and juxtaposed with the toxicity mechanisms of ionic copper. The merit of copper as a hygienic material in hospitals and related settings will also be discussed.
You know a lot has to be said about those days of old when most houses had the copper pipes and sinks and tubs. I read not to long ago that hospitals in the UK were considering changing all the door handles from a stainless steel to copper along with things like bars in showers and anywhere else people would be grabbing onto. Just the fact of changing things like this around the world would take tons of copper. Some people are even talking about going back to copper piping for plumbing like they did not long ago instead of using the plastic like they do today.
Investing In Copper
Of course having higher copper prices is good for copper miners and even for juniors who are exploring for copper desposits. While most of the world largest copper mines belong to the likes of Freeport Mcmoran and Teck and are located in far away places like Chile, there are a few smaller companies that you can invest in right here in Canada.
One of those companies is Copper Mountain Mining TSX:CMMC which has the Copper Mountain mine located in southern British Columbia. This mine produces approximately 90 million pounds of copper equivalent per year. With a mill expansion it is expected to produce 130 million pounds of copper equivalent per year at C1 cash costs of US$1.21 per pound over its mine life of 21 years (based on reserves). Stockprice at the time of this writing is $1.60.
Another Canadian copper project that is still in the exploration stage is the Casino project that is owned by Western Copper TSX:WRN and is located in the central Yukon. This project is still in the drilling stage but has been ongoing for several years and the company has applications in with various governmental departments for the planning of a future mine. Stock price at the time of this writing is $1.75.
Going forward from this point on, until a true vaccine is found or a cure for covid, copper will be playing an important part in everyones daily lives. I think that we will start to see a move to the uses of copper like piping, sinks, fixtures, lotions, creams etc. and the added new demand for these things will make copper exploration even more important as copper starts to shine.
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