Every year, a vast amount of copper is used by the global economy to manufacture a wide variety of goods.
It Protects Portfolios
Inflation can absolutely kill an unprotected portfolio. Why? If inflation is higher than the portfolio’s rate of return, then that portfolio is actually producing a negative real return. (Example: 2% growth – 3% inflation = -1% return) In other words, inflation can be a “stealth” threat that chips away at returns, especially for fixed income portfolios. The good news: holding copper or other commodities can protect against rising prices.
Copper’s Edge
Copper outperformed every major asset class aside from energy – a type of asset that tends to increase rapidly during inflationary periods as well, though usually with high volatility. Copper also outperformed gold during rising consumer prices, tripling the 5.2% gain logged by gold.
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