How to Invest In Copper: Top 6, Value, ETF’s, & Certificate


Investing in copper (copper price) is relatively simple as it can be done via a number of different financial products that follow the price development. This includes certificates, CFDs and Mini-futures.

Copper as a form of investment can also be found in funds as well as shares or investment in physical copper.

The opportunities are thus very large and there is usually a form of investment that suits everyone.

So, how do you invest in copper?

Investing in copper is not particularly difficult and as previously mentioned, you have several different options to choose from. You can for example invest through:

  • Funds
  • Shares
  • ETFs
  • Certificate
  • Physical copper

To be able to trade in certificates, funds or shares, you first need to create an account on a market platform of your choice.

Why invest in copper?

There are several reasons why it is a good idea to have copper in your portfolio. Before I go further into the benefits, we must first find out how to use the material.

In short, it can be said that copper is mainly used for various types of community buildings and the reason for this is simply because the metal has an ability to conduct both electricity and heat in a very fast and efficient way.

The metal can be used for power supply, but also for cabling and cars.

The exposure to the metal takes place via a number of different products and industries, which gives you the opportunity to create a very broad portfolio.

You can also choose to trade both with or without leverage, as well as invest in low-risk funds for long-term savings.

What affects the value of copper?

1. World production

The countries with the largest production of copper are Chile, China, Peru, the USA, Congo-Kinhasa and Australia. Chile, on the other hand, is by far the largest with almost three times as much production as the second China.

In recent years, recycling of copper has increased sharply and approximately 30% of all production is now estimated to come from recycled materials.

Like other metals, copper can be recycled as many times as possible and with increased environmental awareness, and improved technology, this figure can increase over time.

2. Demand

China accounts for about 50% of all demand for copper.

This is mainly based on its production of various products with electronic components. Globally, demand is thus largely controlled by China’s economic development.

A demand that is expected to increase steadily based on the properties of the metal.

The largest producers of copper in Sweden (Boliden) presents copper as an “incredibly important metal in the transition to alternative energy sources such as solar, wind and hydropower plants”.

This is based on the fact that copper is needed to generate and transmit the electricity that is created.

“The availability of copper is thus one of the most important factors for an efficient energy conversion.” / Boliden.se

As electronics are used to an increasing extent, there is a need for copper in a large number of industries. Here, too, information from Boliden’s website can be mentioned:

  • Passenger aircraft – 2% of its weight consists of copper (all cabling)
  • Electric locomotive – Consists of 8 tons of copper
  • Passenger car – About 20 kg (45 lbs) of copper, for an electric car the figure is 70 kg (155 lbs)

3. “Doctor Copper”

Copper is a metal that very clearly follows the business cycle. Thus, “Doctor Copper” can demonstrate the “health” of the current economy.

When the recession puts its claws in the economy, the price will fall and when the boom blossoms, the price of copper increases. Investing in copper can thus be a way of investing in the coming business cycle.

In general, demand for raw materials increases with high growth. Low interest rates can also drive the price upwards based on the fact that investors do not see interest-bearing securities as an alternative.

In addition, the price of USD also affects the price development of raw materials.

This is based on the commodity market being priced in USD.

How to Invest In Copper – Top 6 Ways

1. Copper funds

Buying copper in mutual funds is usually a less risky investment than if you compare with e.g. shares.

In a copper fund, you will invest your money in several different companies and industries that focus on the metal. You can see the fund as a type of fruit bowl with apples from different farms.

If an apple starts to rot, you still have several left.

Your portfolio will be more stable and you are not as exposed if things go badly for a company. The world’s largest fund for raw material management is BGF World Mining A2, which has a specific fund for mines and just base metals.

2. Invest in copper ETFs

An ETF is, simply explained, an exchange-traded fund, which means that you can trade it directly on the regular exchange, just as you do with traditional shares.

The ETF then tracks the underlying asset available, which in this case can be just copper, but also an index or a currency.

If you are interested in investing in copper ETFs, you also have a number of different options to choose from.

An ETF that has become well-known and popular is, among others, Global X Copper Miners, which has chosen to focus on a number of different global producers of just copper metal.

3. Copper certificate

Buying copper with certificates is suitable for you who want to be able to use leverage in your investments and who are looking for a good alternative to an ETF.

Simply put, it can be said that a certificate works in the same way as a promissory note from a treasury bill, but in this case it is instead the bank that is the issuer.

One certificate that may be worth a closer look is the Bull & Bear certificate. The certificate is well suited for those who invest in more short-term trading.

4. Invest in copper stocks

If you do not want to invest in the price itself, you can instead invest in the companies that work in the mining industry via copper shares.

Some examples of Swedish companies include Boliden and Lundin Mining. The Swedish companies in my opinion are in many cases preferable, as they have a broad business area and in many cases focus on more than just copper.

If, on the other hand, you want to invest in companies with a very clear focus on copper, I recommend American shares, e.g. Southern Copper Corp.

5. Invest in physical copper

Investing in physical copper is quite possible, but there are some things to keep in mind.

To begin with, the actual casting and embossing will have a greater significance for the value than if one compares with e.g. silver and gold.

The reason for this is simply because the metal value itself is not particularly high, as copper is not a precious metal.

When it comes to physical copper in the form of just ingots or coins, it is the manufacturing that you pay for, which can be a very difficult and advanced process that requires great technology and knowledge.

Copper has a tendency to be able to oxidize when it melts and therefore great expertise is required to handle the metal and get it as clean as possible.

6. Is silver or gold a better investment?

There are advantages and disadvantages to investing in all the different types of precious metals and metals.

Investing in silver is e.g. very popular and appreciated as it can protect your portfolio from a sour stock market, while gold has always attracted people with a very steady and good value.

The advantage of copper is that it has a fantastic property of acting as an electrical conductor and therefore you can find the metal in many different industries.

If you compare with the other precious metals, it is also very cheap, which has made the metal common to invest in.

However, whether you want to invest in gold, silver or copper is entirely up to you to decide.

I recommend that you read carefully about the different raw materials before you choose and remember that you can combine with advantage to get as wide and secure a portfolio as possible.

If you want to invest in a physical product, however, I can recommend gold and silver in the first place.

Conclusion

I always recommend that you spread your investments (diversify) on different assets to create a long-term and stable return over time. In principle, all rich people diversify their investments.

Now with that said I hope I have been helpful, Good luck with your investments :).

Kevin

Hi, my name is Kevin and I am a weightlifter, now part time blogger. Keep in mind that I dont have any fancy degrees or operate some high-end business company. I am just a dude from Sweden who loves to learn new things, especially new things on how I can inqrease my wealth. And now I have the opportunity to share that knowledge back to you.

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