Chile experienced an 8.8 magnitude earthquake last week. While stories of destruction, mayhem, heroism, and looting dominate the news, there’s an investment subtext lurking beneath the hysterical surface: an interruption in the worldwide supply of copper.
If you’ve been reading the Creating Wealth blog for any length of time, you know we’re in a state of perpetual excitement about the concept of Packaged Commodities Investing™, which we coined to explain the idea that a house is nothing more than a collection of basic commodities arranged together in a particular shape. Think about it. What is a house except the sum of its parts: wood, metal, tin, etc…and copper.
Chile is the world’s leading supplier of copper.
When the earthquake hit, power was lost, copper mines shut down, and the price of copper surged. If you happen to be in the enviable position of owning a rental property, the value of your investment went up accordingly. After all, home ownership makes you a copper investor by default. The value of all the sum parts of your house increased.
As worldwide housing demand grows, so will the price of the underlying basic commodities it takes to build them. Remember universal demand? Housing is a perfect example. Invest in those things which people will always need. It’s easy to live without a Wal-Mart stock certificate but try going without a house. Not so much fun.
The Creating Wealth Team
