Private Investor: Copper's rise means I could be coining it in
Saturday 20 May 2006
How did it come to this? Despite this week's copper price setbacks, my small change - and yours - is now more valuable as scrap than as currency. According to the reports I've read, a penny is worth one-and-a-half pence and a 2p piece is worth 3p if it were to be melted down.
I've got jam jars and piggy banks full of these coins which I always promised myself I'd deposit in my building society account, until I noticed a sign that said they wouldn't take more than £10 in change in one go. When it's that difficult for us to put money away, it's no wonder the savings ratio has collapsed.
Anyway, maybe I should be taking my old coins somewhere to be melted down instead. Not all of the coins, mind you. Only those struck before 1992, and some from 1998, have the necessary high copper content to be worth more than their face value. The newer coins are made from steel, so it's easy to sort them out using a magnet.
I ought to point out as well that it is illegal to muck about with coins of the realm and, despite some enterprising journalist hopping over to France to do the deed, I wonder how many one would need to melt down before it's worth one's while - making due allowance for travel and fuel costs and one's valuable time. Besides, I have a certain sentimentality about old coins, and wish we still had big, round old pennies and twelve-sided threepenny bits to spend. Both have long since been victims of inflation and decimalisation, I'm afraid.
That's enough nostalgia The point about my pennies is that it goes to show what's happened to the copper price. It's risen by such an enormous amount in the past year or so and it's speculative. Maybe the market ructions this week are a harbinger of even bigger shake-ups to follow.
In any case, the rise in commodity prices is about more than the growth in demand from China and other "advanced, emerging" markets such as India and Brazil. There does seem to be have been something of the bubble about it.
Apart from the cash I keep in old jam jars, the only exposure I have to copper is my few shares in Rio Tinto. I bought them about nine years ago for less than £7 a share and they've hit over £32 in their recent peaks. Now, I could just take the profit. Nothing wrong in doing that and it would satisfy a lot of market wisdom. However, I'm still inclined to hang on to the shares because I just can't be sure that my suspicions about the copper price are, well, copper-bottomed.
Even if the copper boom is a speculative bubble, the increase in the price might not be all speculative; there is an increased real demand for the metal, although it has to be admitted that a commodity price/US dollar collapse would leave the real Chinese economy looking a bit shaky too.
So why stay invested in Rio Tinto? Just because, as I say, I might easily be wrong and it is the only exposure I've got to this suddenly important part of the stock market. If it goes now, how would I get it back? I know that's a bit of an investment fallacy but, more broadly speaking, surely it's a good idea to maintain the balance of a portfolio, even if parts look absurdly overvalued.
Maybe it's also good to have bits of the portfolio looking absurdly undervalued. Vodafone was one of the very few FTSE 100 stocks going up at the beginning of the week, though modestly. For all its recent travails, it seems to still serve a purpose as a safe haven in a storm. So mobile telephony, or at least Vodafone, has gone from nothing to meteoric growth star to undervalued, stodgy utility in two decades flat.
Even the recent rumours about a successful sale of its stake in its joint venture with Verizon don't seem to have moved the share price much. The broker UBS has raised its "target price" on Vodafone from 145p to 153p (its been stuck at 120p to 130p for ages). I'd be happy with that.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Unseen Charlie and the Chocolate Factory chapter deemed 'too subversive' released
- 3 Joan Rivers: 'Palestinians deserve to be dead'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
iJobs Money & Business
£40000 - £45000 per annum: Ashdown Group: An established professional services...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
£28 - 32k + Uncapped Commission: Guru Careers: A Business Development Manager ...
£40000 - £70000 per annum + Bonus+Benefits+Package: Harrington Starr: C# .NET ...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony