Monday, January 30, 2006

More peak resource information...Copper!

Hat tip to "Division of Labor".
The point that is being made in the above blog is that since copper prices have risen by 57% this year resulting in the price of the raw commodity is greater than the face value of a copper penney. Just recently I was thinking the same thing, when the issue of peak oil came up. I remember for a short spell that the price of copper was greater than the price of a penny. Banks were also running of pennies as the US mint was transforming to the new penny.

I am sure some of my calculations were off but I saw that there was about 13 pennies to an once (100% copper/pre 62) and the value of the pennies were just over 12 cents per once.

So there are some obvious opportunities for arbitrage, as mentioned in the above link ,that coinstar could pursue. And thus transferring commodities that are unproductive to more productive uses. One economic theory that I learned in international finance is that bad money drives out good money everytime. Thus the good money is real copper that will replace worthless money. Though this is not to say that anything really changes since the value of money is derived by everyone willing to trade for this intermediary object.

If copper is to continue to be high priced then more quantities will come into the market and stabalize the prices, as in more mining, less use in coins, more conservation and lastly substitutes will be used whenever possible with less expensive materials.

Both articles below are interesting on the copper market including some history. But for now let me include one interesting quote:
Doing so is only worthwhile when copper sells on the commodities exchanges for at least $1.55 a pound, the threshold at which a pre-1982 penny surpasses its face value. Copper has remained above that price since July and peaked Dec. 27 at $2.28 a pound.

Bloomberg:Copper May Rise in London

Penny less than sum of parts

A Short History of Fiber Optics

Fiber Optics

Will fiber optics overtake copper in backbone?



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