The Copper FactorThat's an excellent thought!
Yes, the gold producers who have a significant amount of copper by-production get penalized when base metal prices come down. And conversely, they're rewarded as the market to accord the copper sales as offsetting gold production costs.
Throughtout the 1990s, copper was less than a buck. Even in this "The Great Recession", prices are hovering around $1.8. Copper north of around 2 1/2 bucks would really help YRI's stock price.
That means, as great as a gold play as YRI is, as they head from 1MM ounces to 2MM (and importantly, internally funded), this company will have an added bounce as the world emerges from this downturn.
BTW, there's a Jack LIfton, who been hammering the table for rare earth elements (REEs). These "technology metals" are critical in production of batteries, magnets -- a host of clean tech, military and high end electronic applications. Each Toyota Prius has some 30 kg of REEs. Over 90% is produced in China and they have been restricting exports via increased quotes and/or taxes.
From Lifton's
The Technology Metals Age.
"Some of the most important of the so-called minor metals are only foundas by-products of base metals. Thebase metal copper is a source of 75% of the world’s molybdenum andrhenium. Copper is also the source of 95% of the world’s tellurium andselenium.
And when they reduce the production of base metals, they also reducethe production of molybdenum, rhenium, selenium, and tellurium. Sowhat? Well, you can’t make a jet engine or a rocket engine withoutrhenium. First Solar Corporation in Ohio makes cadmium telluride thinfilm photovoltaic cells; the cadmium comes from zinc, and the telluriumcomes from copper. Therefore, the reduction in base metals productionhas also reduced the production of the key minor technology metals usedfor solar—and there is no substitute. So right this minute we’re in thesituation of running on inventory, which is not large, and recycling isalmost non-existent for these materials because their uses aredissipated."
Lifton get really interesting here:
"I predicted at a recent conference that copper would hit perhaps asmuch as
$10 a pound by 2011. Everybody said, oh, you’re crazy. But I’lltell you who didn’t tell me I was crazy—all the men who were on thosepanels. One of them said to me, you know what’s wrong with yourprediction? I said what? He said you’re way low—we know that there arecritical technologies that are now based on derivatives of copper."
Lifton may be well "out there." I'll let each of you decide for yourself.
But even if he's only partially correct, we could see a lot higher copper prices down the road.
And that, YRI shareholders, may have some bearing on your portfolio.