Consumption, speculation and growing demand by emerging economies add up to a rather rosy outlook for copper, says Steve Parsons, Senior Research Analyst for Wellington West Capital Markets. In this exclusive Gold Report interview, Steve explains how investors might capitalize on a theme that's picking up momentum on the copper concentrate side of the industry. He also sheds some light on a great copper story that's unfolding on the northern shore of Lake Superior in northeastern Minnesota, not far from the Ontario border.

The Gold Report: Steve, it's often said that copper is a great way to play a period of economic growth. Do you agree with that?

Steve Parsons: I absolutely agree. Copper is an essential metal for developing nations. Generally speaking, an increase in GDP/person coincides with an increase in copper usage. The story here is that China and India are still coming from a low base. If you look at where copper usage is in developed nations, it is upwards of 9 kilograms of consumption per person annually. China's consumption currently weighs in at approximately 3.5 kilograms per person. So China is still at an early stage of development. The move to urbanization should keep upward pressure on copper usage. By 2025, it is projected that China will have 221 cities with a population of more than one million. At present, Europe only has 35.

One of the fastest growing sectors in emerging countries is the mining sector. Many of the emerging countries are heavily commodity-based economies. Russia is dependent on crude oil, Chile is dependent on copper, Brazil for a wide variety of natural resources, South Africa for gold and other precious metals, etc. As a result, when the prices of commodities rise these emerging markets perform very well.

One way to identify the top mining and metal sector companies in emerging markets is to review an index that specializes in this area. The Dow Jones Emerging Markets Metals & Mining Titans 30 Index is one such index. It contains 30 of the largest emerging-market companies in the this sector. These companies are selected based on "rankings by float-adjusted market capitalization, revenue and net profit."

As the world’s largest country in terms of area, Russia also has the world’s largest reserves of many natural resources. The country is blessed with an abundant supply of oil, natural gas, gold, diamond and other resources. In fact these resources exceed the reserves of commodity producing countries like Canada and Australia. However the vast majority of Russian resources remain untapped.

Since the disintegration of the USSR, some of its vast energy assets have been exploited to meet the growing demands of overseas markets especially Europe. Today Russia is one of the largest producers of oil and natural gas in the world earning the title “energy superpower”.

Gold is the primary tangible monetary asset because of the large above ground stockpiles. It is primarily produced to be hoarded not consumed. The other quasi-monetary commodities are silver, platinum, palladium and copper. The role of the precious metals will be markedly different in the Information Age than during the Industrial Age.

WHAT IS PLATINUM

By Brandon Clay

Ah, Russia. Home to those infamous cold winters, backdrop to so many dark classic novels and exporter of, among other things, vodka. But that’s not all investors should think of when it comes to Russia.

While the “R” in the acronym “BRIC” may stand for the least-talked-of emerging market in the group, Russia has seen an astonishing recovery in 2009. The Market Vectors Russia ETF (RSX) returned more than 103% for the three-month period ending June 5, a testament to the recovery of the Russian economy after last year’s drop. Russia’s current strength may be due to a “not-as-bad-as-we-thought” mentality, but the correction due from such sentiment could lead to further short-term growth. As oil prices recover and currency fears subside, RSX could continue to offer value in a well-diversified portfolio over the short term.

Russia’s substantial 2008 drop, a record 76% for the benchmark RTS Index, can be tied to the burst of the oil bubble late last year. With a large percentage of top holdings tied to the commodities sector, RSX tracks commodity prices closely. While RSX’s price dropped dramatically along with oil prices late last year, the reemerging demand from emerging markets has helped boost the price of scarce oil reserves in the short term.

In a volatile market, rather than trying to get ahead of the daily movements, successful investors spend their efforts figuring out the big picture of long term fundamentals. Many people often draw the wrong conclusion when their views are too narrow: They look at only the demand side and forget the story on the supply side, or they fail to see the effect of government intervention or speculative forces.

Recently, in researching the market trends of currencies, commodities and shipping, I made a stunning discovery, yet almost no one else discussed it in any public literature.

Whether it's precious or base metals in the ground, Rosseau Asset Management founder Warren Irwin likes to see extensive, aggressive drill programs in promising deposits. In this exclusive interview with The Gold Report, he says that investments in such companies have paid off in the past and are likely to do so in the future. Gold or silver, copper or nickel, even if commodity prices fall, he argues that the miners with the higher-grade deposits and busy drills have, and offer, the best price protection.

The Gold Report: Opinions go both ways—whether people should be buying or selling gold, for instance. Copper is picking up and going strong, so some folks say it's time to get back into base metals. Would you share your overview of the precious and base metals markets today? Where do you see the opportunities?

The palladium bull case is getting better by the day, as the Russians are finally going to make their checkmate move, tomorrow:

Russia to launch platinum, palladium futures trade
MOSCOW, April 14 (Reuters) - Russia's RTS exchange will launch trading in platinum and palladium futures contracts from April 15, adding to existing contracts on gold and silver, the exchange said on Tuesday.

The news over the weekend was that the IMF is going to sell 403.3 metric tons of gold. Wow! 400 tons of gold!

Except that this is old news. The IMF has been making a lot of noise about selling 403.3 metric tons of gold for nearly a year now (some say for over a decade!). So what exactly is new? They never sold an ounce of gold. I will believe the IMF gold sell when it happens.

Gold rush 2009 is on, as gold is the front-runner in precious metals, so far. Gold is now only 10% away from its early 2008 high; silver is off 39%; platinum is still off 57% from its high; and palladium is still off 67%.

Don't buy the front-runner, buy the laggard, palladium! Chasing the front-runner and big crowds is the fastest way of losing money. Just look at recent bloodshed in DryShips (DRYS), a front runner in shipping stocks. I switched from DRYS to Excel Maritime Carriers Ltd. (EXM) and cautioned about DRYS in mid-January 09. So, I was lucky to have avoided the massacre in DRYS. There are inherit problems in DRYS that are now exposed, but big crowd sentiments added to the severity of plummet.

I am convinced that the bullish fundamentals of palladium are even better in 2009. Recently, Impala Platinum (IMPUY.PK) updated its estimate of platinum and palladium supply/demand data for 2008. Did you notice the significant drop in the Russian supply? The annual sale of Russian Strategic palladium stockpiles, about 1.5M to 2M ounces a year, finally ENDED! Back on June 11, 08, the palladium market had a knee-jerk response when Norilsk Nickel (NILSY.PK) merely suggested the termination of the stockpiled palladium sale. Now that it really is ENDING, how will people react when it becomes widely known? Russia maintains a Defense Strategic Stockpile for its own wartime needs, not for selling PGM metals below cost to the world.

In Impala's estimates, recycling accounts for 1.1M ounces of palladium supply in 2008. The CPM Group estimated the recycling to be as high as 1.6M ounces a year. The good news is this supply will also be removed in 2009. A new catalytic converter contains about four grams of palladium, while an old one has about two grams left. Recycling recovers about 75%, or 1.5 grams each, worth about $9 in palladium at today's price. The PGM recycling process is a long, complicated and costly one, and at today's low price, there is simply no incentive for recycling. Stillwater Mining (SWC) is better off dropping the PGM recycling business and concentrating on mining. This could also boost the metal's market price, as it would free-up large working capital that was locked up in the recycling materials inventory, and enhance the company's balance sheet, as a result.

The market irrationality has reached a new record. Spot price for crude oil free falls to $31.41 a barrel (WTI Cushing Spot) two days after OPEC cut production by 2.2MB per day and made clear that they wanted to see $75 oil and will continue to cut if necessary. As OPEC vowed to keep cutting until they see $75 oil, oil should go up, but it actually went down. What gives?

In search for an answer, people blame it on "the oil demand has collapsed". Global oil demand did NOT suddenly collapse in the two days after the OPEC announcement. Look in a mirror for the answer. Yes that says you! Every one bet on raising oil after OPEC cut. The market ALWAYS fools most of the people most of the time, logical or not. Fundamentals work in long terms, not in short term moves. If you bet on short term moves, try to bet against most people, instead of betting on fundamentals.

When people see danger in the market, their natural response is to liquidate everything and move everything into cash in order to ride out the storms. The conventional wisdom is "Cash is King." However, conventional wisdom doesn't work anymore, as this is unconventional time. If you are fully loaded in cash or U.S. Treasury Bonds, this news, first noted by Karl Denninger, should completely shock you out of your shell:

According to an October 19 article in Investment News, $2.29 Trillion Dollars US Treasury Bonds Failed To Deliver.

My  Oct. 22, 2008 article discussed the breaking news that Norilsk Nickel (NILSY.PK) was open to offers to buy its majority stake in Stillwater Mining (SWC), America's only PGM mine. Yesterday, as the news spread, SWC's share price plummeted 25% on fears that Norilsk was dumping its shares, which could then depress the share price.

However, upon further research, I am growing more and more suspicious about the credibility of the news story. It could well be a false rumor, after all. I still do not have a definite confirmation or denial of the authenticity of the original news story, but I will discuss why I now suspect the story could be a false rumor.

Important update [Oct. 23, 08]: The story of Norilsk selling its SWC stake might NOT be true. Please see my latest post that deals with these suspicions, and do your own due diligence.

This is the fourth part of my series articles discussing the true valuation of physical assets, paper assets and currencies, vital knowledge needed to survive the unfolding global financial crisis. If you haven't read the previous articles, you can read them here:  part 1, part 2, and part 3.

On October 16, PowerShares debuted its Emerging Markets Infrastructure Portfolio Fund (PXR) amidst one of the most difficult periods for emerging markets in the last decade. While U.S. markets have declined significantly due to the recent financial crisis, emerging markets have been hit even harder by the global crisis. PXR’s debut, however, may not be as ill-timed as some investors believe. As emerging economies rallied on October 13 and 14, the recovery served as a reminder of the incredible potential of small economies worldwide—a potential that PXR proposes to capture.

PXR tracks the S-Network Emerging Infrastructure Builders Index. This index is designed to mirror the overall performance of the stocks of companies involved in the infrastructure construction in and overall development of emerging market economies. A variety of industries are included in this definition, and PXR will include construction and engineering, construction machinery, construction materials, diversified metals and mining, heavy electrical equipment, industrial machinery, and steel. PXR’s index provider may include other industries in the index as appropriate.

Is it deflation, stagflation, or hyperinflation, that we're seeing in the current global economic crisis? That's the quadrillion-dollar question investors must get right. This article will answer that big question but it is also meant to be a sequel to part one and part two of my previous, serial articles talking about valuations of physical and non-physical assets as well as currencies. Please read the first two articles if you have not. It's critical to understand valuation of commodities and currencies first, before the big question of inflation versus deflation.

Recently, as the credit crisis unfolded, we saw the worst commodity price plummet in history, while the U.S. dollar index rallied amid the unfolding financial crisis. Many people wonder that the commodity bull market has ended as the global economy enters a recession. They reason that due to the credit squeeze, people cut back on spending, because they could not borrow any more.

All investments are about buying something at a lower cost to get a higher return later. Therefore, investors should try to understand the value of things they buy and sell. Warren Buffett said you should never buy something that you do not understand. At a time of crisis such as the one we face now, in order to survive and prosper, investors must have a profound understanding of values not just of things physical, but of non-physical things as well.

In my last article, I discussed why physical things have intrinsic value and how they are determined. This article is meant to be a sequel, so I shall continue by discussing the values of non-physical assets. Such discussion is urgently needed, and is made even more relevant today due to the unfolding global financial crisis and the Bailout Fiasco.

Yesterday, barely one week after the fall of Fannie Mae (FNM) and Freddie Mac (FRE), we saw the fall of the third and fourth largest financial institutions at the same time. Lehman Brothers (LEH) filed for bankruptcy, and Merrill Lynch (MER) sold itself to Bank of America (BAC) in a hurry.

The Dow plummeted more than 500 points. We are now looking at an unprecedented financial tsunami and it is at times like this that people MUST preserve their wealth through safe haven investments, or risk losing everything.