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Copper May Jump 22% to $5 as Supplies Stagnate, U.S. Global Says

Dec. 9 (Bloomberg) -- Copper prices may jump 22 percent to $5 a pound within 24 months as supply dwindles amid rising demand, according to U.S. Global Investors Inc., which manages $3 billion in San Antonio.

“Copper is really a supply story now,” Brian Hicks, who oversees the firm’s Global Resources Fund, said yesterday in an interview in New York. Infrastructure projects in China and North America “require a lot of copper, but there won’t be a pick-up in supply in the next two to three years,” he said.

Before today, the metal surged 43 percent since July 1 as global inventories shrank to the lowest since October 2009. Banks from Goldman Sachs Group Inc. to Barclays Capital are predicting higher prices as miners struggle to keep up with rising demand from China, the world’s biggest user.

Yesterday, copper futures for delivery in March rose 1.3 percent to settle at $4.1005 a pound on the Comex in New York, the highest closing price ever.

Other metals will also climb as the dollar weakens, U.S. Global said. Silver may gain as much as 30 percent in the next year and gold may rise another 10 percent after touching a record this week, said John Derrick, the firm’s director of research.

Investors will buy precious metals because there’s a “general lack of confidence in fiat currencies,” Hicks said. “There is a new wave of money flowing into gold trying to hedge against inflation.”

Before today, silver jumped 68 percent this year, while gold added 26 percent.

“Silver is going to do some multiples” of gold’s gain as the dollar loses 10 percent against the euro in the next 12 months, Derrick said.

Yesterday, silver futures for delivery in March dropped 5.1 percent to $28.252 an ounce on the Comex in New York. The metal touched a 30-year high of $30.75 on Dec. 7

Gold futures for February delivery fell 1.8 percent to $1,383.20 an ounce on the Comex yesterday. The price touched a record $1,432.50 on Dec. 7.

To contact the reporter on this story: Yi Tian in New York at Ytian8@bloomberg.net. Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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