The inputs and results are the same over time – commodities are affected by:

• supply and demand,
• inflation, and
• currency valuations if priced in another currency

On a day-to-day basis, they are affected by speculation, gambling, and the wind.

I sold it when I felt copper was fairly priced. I’m not surprised to see it above $2.25 or thereabouts – these things tend to move like a pendulum based on supply and demand. In my case, I bought cheap while supply was dwindling, and then it became expensive as demand increased.

But yes…I sold.

Bram: Copper was not at a normal level when we purchased it. It was cheap. I would sell it around $2.25, adjusted for inflation if it takes a while to get there.

If I understand the above correctly then,

- Copper is currently at more or less a normal level if adjusted for inflation

- But, there are supply & demand imbalances (as well as a large inflation threat and maybe a weaking USD) that will create a upward pressure on commodity prices (even though maybe not right, let’s call it a “bubble” since inflation-adjusted, copper is at a normal level).

I can still see the reasons for investing in copper, before the bubble happens, but my question is then: what is the price target? Because we can’t hold copper forever and expect to make a nice profit in the sense that the inflation-adjusted price is to low currently. Any thoughts on this? If history is meaning anything, then in bubbles we have historically seen prices up to 3.50 (in your graph), whereas 2.25 is the average level. So a 50% rise? But then you also have take into account whether this will happen in a short period or in a long period if anything is to meet a minimum required rate of return right?

If you look at Q4 2008 vs. Q$ 2007, revenues were down 65% as the price of copper collapsed by roughly the same amount. Could PCU generate $5 billion in revenue on $2.30 copper? I’m not sure, but I’d doubt it as the business stands today. At $40 last year, was it cheap? Or was it a bubble stock price in a commodities bubble?

Personally, I’m not convinced that PCU would have been the better buy, even at $13. Time will tell; but, if copper doesn’t get to $3 or $4 in the next year (and I don’t think it should, but the markets love to surprise me), PCU will probably begin to look very overpriced at these levels.

Mike: I’ll gladly start the discussion. What I don’t know in currencies (a lot) should bring some interesting discussion (and insults!)

tc: I don’t know of a site that has them just “out there.” A few posts back, I mentioned the CRB Commodity Yearbook. It comes with a CD with historical commodity pricing. As for the inflation-adjusted price, you have to figure it out manually.

Would you please let me know where I can find historical commodity prices and inflation adjusted historical prices?

Thanks,

TC