Copper Is King

Article excerpt

Byline: Niall Ferguson

Gold prices are up, but another metal connects the world--and reveals our economic future.

Copperfinger doesn't have the same ring as Goldfinger. Nor would you be very impressed by a man with a copper gun.

Copper isn't glamorous. Unlike gold, it is not likely to be recommended as an investment by Glenn Beck. Yet, before and after the financial crisis, copper has been one of the world economy's star performers.

Sure, you were smart if you bought gold at the bottom of the financial crisis, back in February 2009. With gold touching a record $1,500 an ounce last week, you're up 75 percent. But if you'd bought copper, you'd be up 181 percent.

Today the world's copper mines are booming. I spent several hours last Tuesday sweltering nearly a mile underground at the huge Konkola mine near Chin-go-la in Zambia. It's a powerful symbol of the new economic world order. The miners are Zambians. The technical guys are (white) South Africans. The owners and managers are Indians.

Like most Zambian mines, this particular one was not viable with prices below $2,000 a ton, as they were between 1997 and 2003. But with copper up to about $9,400, it makes sense to sink new shafts to reach the deepest ore, even though it means dealing with prodigious amounts of underground water.

Here, where the mighty mechanical drill bores into the wall of the most recently blasted stretch of tunnel, is the sharp end of the world economy. When you switch on the light, it's copper wire that conducts the electricity to the bulb. Chances are the hot water that came out of your shower this morning arrived there through a copper pipe. From the corrosion-resistant copper carbonate that makes the Statue of Liberty green to the circuit board in your computer, the brown metal is as practical as the yellow metal is precious.

So just why has copper been trumping gold as an investment? The answer is partly that the extraordinarily loose monetary policies adopted by Western governments to combat the financial crisis have driven up the prices of nearly all commodities. …