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The Copper Crime Indicator

By PiercePoints. Originally published at ValueWalk.

Beware, there are roaming gangs of criminals stealing … copper.

That’s what my mom told me a few years back when she was recounting all of the items I needed to keep an eye on. Copper was an unexpected addition to the list.

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Copper Prices
Image source: Pixabay

After all, I thought of protecting my gold, silver and the other precious gems and materials we pull from the earth. But I never really thought about locking up my copper — that industrial metal found in everything from microwaves and refrigerators to your home’s plumbing.

But after digging into it a bit — I found out copper theft was a bigger problem than I even imagined.

In 2008, the FBI sent out an intelligence assessment report, titled “Copper Theft Threatens U.S. Critical Infrastructure.” It seems waves of thieves were targeting cellular towers, telephone land lines, railroads, construction sites, vacant homes and more for the metal. This epidemic was, the FBI mentioned, due to increased demand from China and India, which was creating robust international trade.

The FBI warned: “As the global supply of copper continues to tighten, the market for illicit copper will likely increase.”

And it did: The amount of copper that’s pinched and sold in the U.S. exceeds $1 billion annually. Which is why one of the fastest-growing niche industries in the security field is focused on preventing copper theft.

Now, copper-plated crime hasn’t hit the major newswires quite as frequently as it did a few years back, particularly in 2011, when the price of copper reached an all-time high. The COMEX futures contract traded at $4.65 per pound. It’s now around $2.70.

But there are still reports coming in every day. Just do a quick Google news search for “copper theft,” and pages upon pages of articles will appear about copper crimes committed in just the last couple of weeks.

With that in mind, I’m going to make a prediction: I think those reports are going to increase again in the years ahead — and that’s a barometer that natural resource investors should be keeping in mind.

Because it means copper’s price is on the rise.

See, while prices plunged to about $1.93 per pound in January 2016 — a six-year low — as China’s economy cooled and production rose, copper is now on the way back up. It broke out last November, ending the year up 18%. So far this year, copper on the London Metal Exchange has risen 5%. That may not be a huge surge — but there are signs of further growth for the red metal.

For one, our natural resources expert Matt Badiali says mining companies have cut output and demand is growing again. And in a June 26 report, Barclays estimated that global demand will exceed mine output by 56,000 metric tons this year, growing to 72,000 tons in 2018. That’s quite a change considering there was a surplus of 102,000 tons in 2016.

This is precisely why Matt is so bullish on copper. In fact, he recently recommended a copper play to readers of his Real Wealth Strategist newsletter in an undervalued company that is set to double over the next year as the price of copper rises.

So if you’re interested in natural resource investing, I suggest taking a good look at copper. You can start learning more about it and how you can profit from similar types of trades by clicking here.

Meanwhile, I’m going to be keeping an eye on the rise of copper crime as the price of the metal rockets. And maybe I’ll go back to my mom and apologize for scoffing at her copper worries.

Catch you next week.

Regards,

Jessica Cohn-Kleinberg

Managing Editor, Banyan Hill Publishing

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The post The Copper Crime Indicator appeared first on ValueWalk.

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