This junkyard dog may soon be a millionaire
The scrap metal business has long been a low-margin, low-glamour, low-prestige, high-filth business. But with soaring prices for gold, silver, and copper, scrap is suddenly precious metal. Individuals may be puzzling over whether it makes sense to melt the family jewelry, but businesses are already practicing commodity arbitrage with old junk.
When market prices rise sharply, people figure out how to extract value embedded in the commodities they already own. The high price of key raw materials — gold, silver, zinc, steel, wood—is stimulating salvage operations all over the globe. As the price of gold has risen, production of scrap gold has risen sharply, according to the Yellowbook, from 620 metric tons in 2001 to a projected 998 metric tons in 2006. In his April 22 New York Times column ($ required) Floyd Norris noted that a penny could soon be worth more than one cent, largely because of the soaring price of zinc, which comprises 97.5 percent of today’s pennies.
