Gold returns to where it was last week, and silver bounces up but nowhere near the US$14 range it was at in the previous week. Gold is now over US$200 from where it was last year, nearly a 50% climb in a 365 period. NYMEX is down a bit, again, pushing back from the US$75 area it was at in the previous week.

Oil: US$72.20
Gold: US$639.40 (Gold to Oil Ratio at 8.8560)
Silver: US$12.80 (Silver to Oil Ratio at 0.1773)

It seems as if the gold equilibrium point keeps pushing up, but the reason is very complex. Jeweler demand is up, investor demand is way up, physical gold bug demand is up. Central banks still have a supply to sell, mining companies had a great year adding to supply, but there aren’t many physical holders selling. All said, higher demand with a higher supply should mean the price should stay fairly stable (as demand is met by supply). So why the increase? Could also be moving higher against the dollar due to the dollar’s devaluation by the central bank?

In central banking news, the Iraqi Central Bank is trying to dump its reserves of coinage by paying public servants in coin. The Australian central bank is believed to be holding off on tightening the money supply until later in the year. Famed playwright Samuel Beckett is to be displayed on the first Euro gold coin. Bankers in Bangladesh are demanding a cut in reserves. The Canadian dollar has hit 14 year high. Russia’s M2 money supply is up 2% in the first quarter of 2006. The Polish central bank has left key rates flat, as forecasted.

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What is a precious metal? Is it one that is truly rare, or just one that is desired and almost loved when acquired?

Gold is the only real precious metal to me — it is very dense, very recognizable, and almost impossible to counterfeit. Yet for others, gold isn’t as useful as another metal that has grown quicker than gold and may have opportunities to go ever further: copper.

Copper is a metal that is not necessarily rare, but it is still costly to mine. Copper is used in almost every item we use during the day: computers, phones, TVs, even our houses and cars contain a large amount of copper. As copper prices go up, the contractors that need copper get scared that they may not profit on a project based on copper’s growing price against a failing dollar. Copper prices also affect the air conditioning industry, the refridgeration industry and every electronic industry since that industry blinked into existance decades ago.

Circuits Assembly has an article that I found because I was searching for articles with the same title I was going to name this one: Copper, the New Gold. I changed the title based on finding this gem. ABC7News (my local “news” network) has an article today, too: Copper Hits Record High on Fund Buying. Both articles attribute copper’s new record price to both massive fund buying as well as continued copper mine strikes. Copper mine strikes have created huge burdens on the price of copper not just from a supply perspective, but from a labor-cost perspective which must be passed on to the copper-using manufacturers throughout the world.

Some people think copper might be so valuable that they’re stealing it right out of A/C units! They’re not getting much for their time and risk, but it shows how quickly a metal can change from being “not worth a cent” to being worth risking your freedom for.

The biggest concern on copper is in the housing and commerical building industry. Copper is used not just in home electricity delivery, but in plumbing as well. If copper continues to go up, it can have a huge effect on the new developments that are already on the verge of being canceled. As copper goes up and the sales price of new condos and homes goes down, developers might find themselves exiting the market before breaking ground rather than risk not meeting a profit.

I’m not a stock market investor, and I don’t recommend buying commodities without knowing full well what the manipulation-pressure is doing to a commodity’s market price, but I also think copper should be watched very closely by the average gold and silver bug. I’ve never held copper in terms of using it in a time of currency crisis, but should we see some international money supply problems, copper might not be a bad item to use for smaller purchases and trades.

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