Forget silver and gold. Copper has been a truly precious metal over the past five years. The price of this ultra-useful base metal has risen from a low of $0.61 a pound in late 2001 to as much as $2.14 a pound this month. That makes the doubling of silver prices and the near-doubling of gold over that same time period look downright chintzy by comparison.

While gold and silver both have their uses, they pale in usefulness in comparison to copper. I don't want to sound like a paid spokesperson of the Copper Council, but this metal is used in everything from wiring and plumbing to motors, circuits, and corrosion-resistant alloys. Given its place in construction and manufacturing activity, it won't be any surprise to hear that China's economic growth has sucked up a lot of the world's copper production in recent years.

And that's not all there is to the story. As has been the case with many other metals, low prices in the past led to underinvestment in new capacity. So, with strong growth in China, a recovery in Japan, and good manufacturing activity in the U.S., demand has led to lower inventories and higher prices. Making matters worse, there are fears that miners will use the current high price of copper as leverage in salary negotiations -- leading to the possibility of strikes at large producers like Chile's state-owned Codelco.

In the meantime, these are good days for copper producers such as Phelps Dodge (NYSE:PD), Southern Copper (NYSE:PCU), and Freeport McMoRan (NYSE:FCX) -- all of which have seen their stocks appreciate more than 40% in the past six months. What's more, cash has been flowing into these companies.

The trouble, as there often is with commodity stories, is that the cat is already well out of the bag on copper. True, it will likely take at least another year or two for production to catch up with demand, but the market is likely to start moving the price of copper down in anticipation of that equilibrium. What's more, production costs are steadily increasing, and a lot of copper reserves sit in politically shaky locations (a positive, perhaps, for overall pricing, but certainly a potential company-specific negative factor).

It's certainly possible that higher copper prices are here to stay and that analysts will have to scramble to raise their estimates in the months to come. Nevertheless, I can't help but recall the paraphrased advice of Sir John Templeton to buy into fear and sell into enthusiasm. I do happen to like Southern Copper's business, and none of the three major companies seems overvalued, but I don't see nearly enough of a margin of safety to dive in at a time when it seems that copper prices may be peaking.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).