Copper is the alternative to crypto, not gold – Goldman Sachs’ Jeff Currie

By: Faith Maina
Faith Maina
Faith strives to break down complex developments so investors can make better informed decisions. When Faith is not immersed in the… read more.
on Jun 2, 2021
  • Copper price has remained largely above $4.5000 per pound since hitting its record high earlier in May.
  • Goldman Sachs’ Jeff Currie says cryptos are an alternative to copper as a hedge against inflation, not gold.
  • Cryptos and copper hedge against demand-driven inflation while gold hedges against supply-fueled inflation.

Copper price remains above $4.5000 amid heightened demand. With reference to hedging against inflation, Goldman Sachs’ Jeff Currie has stated that cryptos should be seen as an alternative to copper rather than gold.  

copper price

Copper as alternative to cryptocurrencies

As inflation concerns continue, some investors and analysts alike now view Bitcoin and other cryptocurrencies as a substitute of gold for its status as a hedge against inflation. However, Goldman Sachs’ global head of commodities research, Jeff Curries has stated that cryptos are an alternative to copper and not gold. During an interview on CNBC’s Squawk Box Europe on Tuesday, the analyst highlighted the direct correlation between copper and digital currencies like Bitcoin.

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On the one hand, Bitcoin and copper acts as a hedge against inflation in risk-on setups. Conversely, gold is an apt safe haven in a risk-off environment. To substantiate this ideology, Currie stated,

“There is good inflation and there is bad inflation. Good inflation is when demand pulls it, and that is what bitcoin hedges, that is what copper hedges, that is what oil hedges. Gold hedges against bad inflation, where supply is being curtailed, which is focused on the shortages on chips, commodities and other types of input raw materials…you would want to use gold as that hedge.”

Copper price rallying

Earlier in May, copper price hit a record high at $4.8905 per pound ($10,460 per tonne). While it has since pulled back, it has largely remained above $4.5000 per pound. Even as the Chinese government strives to control commodity inflation, heightened demand continues to boost prices. Due to its electrical conductivity, copper has an array of applications from phones to home appliances and automobiles. Notably, an electric car contains about four times the amount of copper as in a gasoline-engine vehicle.

According to Goldman Sachs, the green economy will fuel the growth of copper demand by about 600% by 2030. This will place the demand level at 5.4 million tonnes. At the same time, the bank estimates a supply gap of 8.2 million tonnes by 2030.   

Copper price technical outlook

Copper price is down by 0.62% at 4.6240.  After hitting an intraday low of 4.4450 at he beginning of the past week, the price has remained above the important support level of 4.5000. On a four-hour chart, it is trading slightly below the 25 and 50-day exponential moving averages.

I expect copper price to remain above 4.5000 in the ensuing sessions. In the near term, it will probably find support at 4.5455. On the upside, the bulls will be seeking to gather enough momentum to push the price past the current resistance level at 4.7070. Above that, the next target will be at mid-May high at 4.7855.

copper price
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