Copper has long been held up as a key indicator of global economic health, and as the world electrifies it’s taking on a new shine, making it a potentially compelling choice for green-minded investors.
Read on to get an idea of the supply and demand dynamics that move the copper price, as well as how to invest.
Indeed, copper had a breakout year in 2021. Copper futures on the London Metal Exchange reached what was then a new peak of over US$10,700 per metric ton on the back of higher demand projections.
Copper supply and demand are also being affected by Russia’s war in Ukraine, which has contributed to higher energy prices and other inflationary pressures. Russia is one of the top copper-producing countries.
Exchange-traded funds (ETFs), futures and mining stocks are common methods of investing in copper.
For investors looking to invest in physical copper, purchasing copper is possible, and copper is sold in rounds and bars of various weights. However, due to its relatively cheap price per pound compared to other common investment metals, a decent physical copper position would take up a lot space, making physical copper an inefficient investment option.
In the case of a copper ETF, investors are able to access the copper market indirectly by looking at funds focused on copper or copper-mining companies. ETFs are seen as a lower-risk way to invest.
Lastly, there are copper stocks, which can be risky, but are one of the most direct routes to the market. Investors can buy shares of firms involved in copper mining, development and exploration, and ride the ebb and flow of both these companies’ performance and the copper price. Typically, more advanced companies are less risky compared to juniors.
This is an updated version of an article first published by the Investing News Network in 2020.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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