Arguably, the Most Important Metal
Copper has been a cornerstone of human development for thousands of years. During the Bronze Age, humans discovered that mixing copper with tin produced bronze, ideal for making tools and weapons because of its versatility and abundance.
In modern times, copper's significance has only grown, especially with the advent of electrification. Copper is a superb conductor of electricity and heat, so it’s essential for electrical wiring in homes, EV charging stations, motors, and other components.
A Bellwether for Good or Bad Times
Copper is often referred to as "Dr. Copper" because of its ability to predict economic trends. The price of copper tends to rise during bull markets when economies expand, resulting in industrial activity, and the opposite is true in bear markets. This correlation is more pronounced with copper than silver and gold because of copper’s greater emphasis on industrial applications relative to monetary uses.
Copper as Metal in Currency
Copper’s role is somewhat nuanced as a monetary metal. In the United States, for example, the Constitution mandates that only gold and silver be used as legal tender. However, copper has been used for smaller denominations due to its lower value.
Most modern pennies are not pure copper but comprise 90% zinc with a thin copper plating. Despite this, copper coins of higher purity were originally introduced to facilitate smaller currency exchanges, making transactions more convenient for everyday use.
Bullion Dealers Love Copper
Copper is popular among bullion dealers because it offers the highest margins of any metal they typically sell. Some dealers can achieve margins of up to 100% on copper products. This is due to copper's relatively low cost—a bar or coin could cost a few dollars to a buyer but only a fraction of that to mint.
Copper’s Relationship to Gold
Much of the gold produced globally is a by-product of copper mining. One of the world's largest mines, the Kennecott Copper Mine in Utah, exemplifies this relationship. This massive open-pit mine is so extensive that it is visible from space. Enough gold and other precious metals are extracted alongside the copper to justify the operation of an on-site gold refinery.