Why copper’s a better inflation hedge than gold

For centuries, gold has been a go-to asset among investors worried about all sorts of financial risks.

When it comes to inflation, which can erode the value of portfolios that don’t keep pace with rising consumer prices, anyone who bought gold as a hedge over the past 25 years missed out on a much better deal – copper. While data show that broad commodity indexes provided the best bang for the buck during periods of rising costs in the U.S., the red metal stands out.

For every 1 percent annual increase in the consumer price index since 1992, copper jumped almost 18 percent, more than three times the 5.2 percent gain logged by gold, according to a correlation analysis of total return commodity indexes compiled by Bloomberg.

The correlation of any one commodity to rising consumer prices can be volatile. For example, copper fell in 2011 even as inflation accelerated.

While inflation has been relatively tame since the financial crisis almost a decade ago, there are signs it may start to accelerate again.

Last year, copper jumped 18 percent, while spot gold rose just 8 percent.

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Article source: http://www.dailystar.com.lb//Business/International/2017/Jun-29/411083-why-coppers-a-better-inflation-hedge-than-gold.ashx