I read another article today where copper mining and aluminum ore are both down 27%. How do the copper bullion collectors feel about this. I'm not one, but you don't see the speculation or all the hoarders saying much lately. Do you have a plan if face is all you will get for coins and a loss on the bullion?
I think most often it is the contrary, as demand/value goes down, so does mining effort. Why dig and process, if you have to sell or contract for future delivery at a low point, just save it in reserve for increase in value.
It depends on the circumstances and the mining companies agenda. Lowering production doesn't necessarily mean demand has gone down. Demand could be stable (or even going up), but if mining companies speculate that they could achieve higher profit margins by by reducing supply then they will do so. On the flip side, sometimes companies increase production when demand is falling in order to keep revenue stable. We saw this with gasoline a year or two ago. Demand/price for oil was falling and OPEC ramped up output - which further drove prices downward. If they feel like the best way to continue making $X when price has dropped in half (for example) is to double output, then that's what they will do. Of course flooding the market usually drives price further downward, so there's only so long they can keep up that strategy.
I still like copper long term, especially considering the byproduct metals mined with it. Being the second greatest generator known, and how the world will continue to be more dominated by electricity, I don't see a long term downside to it. I am actually using current market conditions to add to some long stock positions that mine it. Physical copper? Way too bulky to be worthwhile unless I had a secure warehouse somewhere empty.
You could line the bottom of your gun safe with ten pound bricks to make it a little harder to cart off in the middle of the night.
And when the burglars crack open the safe they will think, "these bricks must be valuable!" Suckers!!!
May be terrible news to some people but I can't see anyone on this forum going whole hog on investing in copper at all. Many of us hang onto Lincoln's but that's as far as it goes for me.
But wouldn't it be more prudent to cash those in and buy one coin with a great chance to go up in value? Your investment could pay you an easier return for the same dollars.
So who is the wise prognosticator that can choose that? What would you do, bet on key coins that are already MASSIVELY overpriced versus their rarity? Bet on modern issues that mintages continue to decline? Its a pretty far stretch to be able to pick the "winner". I hear your theory, and I agree the upside for copper cents is very limited. However, so is there downside. So in this example I would say copper cents are like a safe bond and collectible coins like a tech stock. Both have their places, but there is no doubt cents are safer in my view, with lower potential increases, but also lower potential losses. It reminds me of an article I read recently about baby boomers and their collectibles. They cannot find anyone who even wants their collections for most things, and the few things that can be sold are being sold. I simply worry about if coins will start feeling downward pressure from the mass of baby boomers starting to cash out. Maybe not the rarest pieces, which has a weird art like prices, but everything sub-$5000 I worry will fall under increasing volume pressure. Just a thought.
But there are also hoarders with massive collection of pennies. The baby boomers collectibles are more inclined to be about nostalgia. It may or may not be collectible or valuable to others. They are not collected for their intrinsic value.
