Copper in 2003

Imagine it's 2003 again. You're listening to Eminem and 3 Doors Down on a first generation iPod. Boxy TVs flash with warnings of tensions between U.S. and Iran. Theaters are showing Pirates of the Caribbean and Finding Nemo.

You start to wonder how you could ever afford to purchase a flat screen TV...

 

The Investment Landscape in 2003

We were fast approaching a new era of internet-connectivity and handheld computers set the stage to improve global standard of living. 

New economic engines revved while global uncertainty and unrest grew.

This set up, in 2003, presented unique opportunity for investors. 

 

Risk-On vs. Risk-Off: Then and Now

As an investor in 2003, as now, you have the choice to purchase a mix of risk on assets and risk off assets. 

Investors can pay respect to global uncertainty by purchasing traditional risk-off assets--bonds from high credit-rating governments and companies; precious metals; stocks within utilities, health care, and consumer staples sectors; cash and cash-equivalents

One can act as a futurist, predicting and purchasing the best of risk-on assets--Apple stock (Remember the first ipods were released in the early 2000s?), other equities including stock indexes, commodities, bonds from low credit score entities, currencies, real estate. 

 

The Case for Copper in 2003

In 2003, copper faced limited mining supply, a drawdown in global inventories, and rising demand. From supply and demand fundamentals, copper was an obvious choice. Other factors such as war tensions and the possibility of disrupted trade added to growth potential of commodities prices. For individual investors, copper was a fundamentally sound, risk on asset available on futures markets around the world.

By 2006, new technology had gained a foothold and global tensions had boiled over. Copper investors gained 5 times in portfolio value, also vastly increasing the amount of capital available to leverage. 

Investment value grew as such:

10 -> 50

1,000 -> 5,000

100,000 -> 500,000 

From 2003, Nasdaq index buyers saw stable increases only after 10 years, meanwhile enduring significant drawdowns.   

 

Parallels to Today: Silver’s time to shine?

Today's investment landscape shares many similarities with that of of 2003. Picking the right commodity within uncertain markets that face inflation has rewarded investors with  some time periods' highest returns.

Today, silver stands as a commodity with the most advantageous supply-demand dynamic, as copper did in 2003. It's also critical to technologies entering mass production such as solar panels, EVs, solid state batteries, 5G infrastructure.  Silver looks like a stand-out risk-on commodity investment today. 

Additionally, silver's role as a risk-off precious metal prepares it for price strength for a variety of other reasons.