More precious than gold, copper is a better inflation hedge

New York

FOR centuries, gold has been a go-to asset among investors worried about all sorts of financial risks. In the past decade, exchange-traded funds backed by the metal drew more money than any other commodity. Even the world's biggest central banks hoard bullion as a reserve asset.

But 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 shows that broad commodity indexes provided the best bang for the buck during periods of rising costs in the US, the red metal stands out.

For every one per cent annual increase in the consumer price index since 1992, copper jumped almost 18 per cent, more than three times the 5.2 per cent gain logged by gold, according to a correlation analysis of total return commodity indexes compiled by Bloomberg. Only a broader index of energy commodities, which includes oil and …