Copper: The Essential Metal: Supply and Demand

Here’s an article I read on –

Somehow I’ve ended up talking about copper quite a bit and this graphic from the Visual Capitalist does a good job of succinctly explaining the supply and demand outlook for copper.   I’ll have to check back with Visual Capitalist, I like the format of this.

Basically save your copper pennies because the long-term outlook for copper is good as emerging economies around the world uh, emerge.  It says that China’s per-capita copper consumption will double by 2025 (their total consumption is pretty significant already).

Discussing Alternate Currencies in Washington / Copper as a Barter Currency

Recently Rob Gray of the American Open Currency Standard testified in front of the House Financial Services Subcommittee on Domestic Monetary Policy on the subject of competing/alternate currencies.   Mr. Gray has been running the AOCS for five years, which issues barter credits to be used in trade between willing participants.   You can read more about the program and his time in Washington here.    He gave a scathing speech and the gist of it to the government was “just stay out of our way”.   He brings up the point that currencies come and go, but there’s always a human desire to trade and we as humans will always find ways to facilitate it whether or not there’s a government-issued currency.  I liked Gray’s approach of political indifference on the matter – he isn’t asking for any laws to be made or repealed, he’s just asking for them to basically leave the issue of alternate currencies alone and let the people decide.    On his webpage he posted the following statement:

Let’s stop talking about auditing the Fed.

Forget about ending the Fed.

Let’s start ignoring the Fed,

and eliminating the impact they have on our lives.

Honestly, I think that’s a pretty good and practical approach to a lot of things in this country and I try to address that on this blog and in my daily life.   Sometimes instead of trying to change the system, it’s best to try to find ways to limit the impact of the system on you.    I think it’s great that the politicians in Washington had to sit through that speech – all except Congressman Al Green (D – TX), who apparently had enough and walked out when Gray called the Federal Reserve and all the politicians present that enable it thieves.

Fans of “sound money”, precious metals, barter and/or Ron Paul, or even folks who just enjoy watching politicians have someone set up camp in their asses every now and then will enjoy his speech:

I have a couple of the Ron Paul AOCS 1oz copper bullion rounds and I would like to pick up some more of the different ones they offer.   I have to say that they are pretty cool coins and they feel like something that actually has intrinsic value.   Each 1oz copper round is given a value of 2, which corresponds to roughly $2 worth of barter – if the participants want to give it that value, of course.

I’m glad that AOCS decided to go with copper and other metal rounds instead of just issuing electronic credits, plastic, coupons or something else as a medium of exchange.  Copper has played a role as a medium of trade (aka “money”) for thousands of years and there’s something timeless about using metal money in today’s world of Visa cards and paper money.   Even in this country we’ve historically used copper for pennies, although these days we use an alloy that is almost entirely zinc.

Going back to a few hundred or even a couple thousand years ago to agrarian economies, a commoner would have recognized copper as a metal with a great degree of utility and a little bit of beauty if put in the hands of the right craftsman.   Copper utensils, cookware, chains and handcrafts would have been prized and any bit of copper could always be used for one of these items.   Today copper is just as useful and prized in our society for wiring and piping as well as other things – look at all the copper theft going on if you need proof.   One big selling point of copper is that it’s easily recyclable – all you have to do is melt it and it’s about 100% reusable.   It also never goes bad, it’s durable and changes of or within government have no impact on it, making it a good choice as money.

Just based on my gut feeling when I look at one of these rounds, I would imagine that if I went back to one of those previously-mentioned agrarian economies, one of these rounds would purchase a small unit of some agricultural product – I’m thinking something along the lines of a squash, a couple of tomatoes, a couple of potatoes, a bunch of greens, a couple carrots, two eggs or something else comparable.   Perhaps a couple of coins could get a blade sharpened, a mug of beer or a loaf of bread.    In other words, copper as money fills in the gap for the small day-to-day transactions that might be too small to handle with silver and definitely for gold and allows for a little more denominational flexibility.

I also think that today if I ran into a merchant at the farmer’s market that accepted AOCS copper, I would be able to pick up just about the same amount with one ounce of copper as someone would’ve been able to centuries ago – even theoretically using the same atoms of copper used back then.     There definitely is something cool about the timelessness of metals as a medium of exchange between two parties…


Saving Copper Pennies

Throughout history coinage has often had intrinsic worth due to the metal used in the minting, namely silver and gold. Pennies made with copper are no exception as man has used copper since antiquity in many applications (including trade) and it still remains one of the most widely used industrial metals.   Hell, you’re probably only a few feet away from copper, either in your computer, wiring in the walls or pipes.

As I mentioned in “China’s Rise and Competing for Resources“, the demand for commodities are generally increasing as the world’s population grows and a large segment of that population becomes increasingly more affluent and industrialized.    The rise in price of copper over the past handful of years has lead to increased theft of copper products (such as wire and pipes) to sell as scrap.    In 2011, someone broke into the Iowa State Fairgrounds and stole approximately 300 brass (copper and zinc) faucets from public restrooms in order to sell, which added up to about $8000 worth of metal.
Pennies in the United States used to be made with an alloy of 95% copper and 5% zinc.    Just as they stopped using silver for coins in 1964, they stopped making predominately copper pennies in 1982 – some of the pennies from that year were 95% copper, some were 97.5% zinc, as they are today.    Although it currently costs the US government more to mint the zinc pennies than their face value, it would be even more costly to use the traditional copper.

Right now the metal value of a true copper penny is around 2.5 cents.    I’ve seen people on eBay and Craigslist selling rolls of 100 copper pennies for $4.   The price of copper today is about $3.50 a pound.  We’re not exactly talking about a precious metal like silver or gold here, but it’s worth considering saving your copper pennies.    I sifted through my piggy bank while watching TV a while back ago and since then I’ve been putting them aside in a bag as I get them.   I don’t think it’s worth going overboard and sifting through thousands of pennies (although some people have devised clever ways to do this!) and it sure isn’t going to make you rich, but it’s worth putting them aside as you get them.

When the US government stopped minting silver coins, people began to take them out of circulation due to their metal value.   Currently those silver coins trade for considerably more than their face value – a 90% silver dime is going for approximately $3 on eBay today and I should note that silver prices are low at the moment (about $27.50 an ounce).   I’m not suggesting that copper’s increase will be as dramatic as silver, but it’s a very safe bet that the metal price of the copper penny will continue to be more valuable than the face value – and if it isn’t, you can still use them as you would a zinc penny for the face value.   There’s absolutely nothing to lose by sitting aside the copper pennies you acquire.

Due to the relatively low price per pound, it doesn’t make a lot of sense to hold a ton of physical copper as an investment but there are exchange traded funds, but it’s kind of cool to have some coinage and bullion around.   The American Open Currency Standard is an interesting project where they’ve developed a network of merchants that use an internal currency based on metals.   Their one ounce copper coin corresponds to roughly $2 worth of barter within the network.   This arrangement allows for people to use a currency other than US Federal Reserve notes and if anything, the coins are a nice collectable item and good for spreading certain libertarian-themed messages.

Oh, I should also add that as of right now it’s illegal to melt down coinage – but they still keep their value as metals. Good for barter and a store of value, right?

So save your copper pennies. You might be glad you did someday.