How To Invest In Copper in 3 Steps

Last updated 03/15/2024 by

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Summary:

You can invest in copper through copper ETFs, purchasing stock in mining companies, buying copper futures contracts, or even by purchasing physical copper. Though this could be a great way to diversify your portfolio, copper investments can also be risky.

Copper is not only one of the oldest and most precious metals ever used, but it’s been one of the most popular industrial metals due to its malleability, resistance to corrosion, and conductivity, ranking third behind iron and aluminum. With its wide variety of uses and essential nature for many industries, it’s become a highly sought-after commodity by investors.

Investing in copper is a great way to diversify your portfolio and hedge against inflation. So how do you invest in copper? What are the risks and rewards? And what are some things to watch out for? In this article, we’ll share with you everything you need to know about investing in this essential metal and how to get started.

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Ways to invest in copper

You can start investing in copper in a few different ways, such as investing in copper ETFs, copper futures contracts, or copper mining stocks.

Exchange-traded funds

Exchange-traded funds (ETFs) are investments that allow you to buy a basket of assets in one purchase, typically through multiple assets like stocks, metals, and bonds. This is a great way to invest in copper because it diversifies your risk and exposes you to various companies involved in the copper industry.

Three of the most popular copper ETFs to consider include:

Global X Copper Miners ETF. With an ETF expense ratio of 0.65%, this copper ETF is a great way to get exposure to the mining industry through more than 39 different copper stocks.
United States Copper Index Fund. This copper index fund is an ETF that invests in futures contracts for copper with an equal amount of collateral, providing a solid return with low volatility.
Ipath Series B Bloomberg Subindex Total Return ETN. With a lower investor fee of 0.45%, this ETN is an excellent option for those looking to get exposure to copper without the risk of futures.

Futures

Investing in copper futures is another way to get exposure to this essential metal. Futures are a contract between a buyer and seller where the buyer agrees to purchase an asset, like copper, at a set price and time in the future.

This is a more risky investment because you’re betting on the price of copper going a specific way. That being said, if you’re right, you can make a significant return. However, it’s important to note that you should only invest in copper futures if you’re comfortable with the risks and have some experience investing in commodities.

Mining stocks

You can also invest in copper mines and companies involved in producing this industrial metal. This is a more risky investment because it depends on one company’s success, but it can also offer a higher potential return.

Some of the biggest copper miners and producers include Rio Tintos, Freeport-McMoRan Inc, and BHP.

Copper bullion bars and coins

Another way to invest in copper is through physical copper bullion, which are bars or coins made of pure copper. This is a more hands-off investment because you’re not buying shares of a company or betting on the future price of copper.

Instead, you’re investing in the metal itself and holding it as a physical asset. The most significant advantage of this investment is that you don’t have to worry about the success or failure of any one company. The downside, however, is that it can be more difficult and expensive to store and insure your copper.

How to start investing in copper

Investing in copper is a great way to get exposure to this essential metal. So, how exactly can you start investing in copper? Here are a few easy steps to get started.

1. Choose your method of investment

The first step is to decide which investment method is right for you. Investing in physical copper or an ETF might be the way to go if you’re looking for a less volatile approach. However, if you’re comfortable with the risks and are looking for a potential higher return, you could invest in copper futures or mining stocks.

2. Do your research

Once you’ve chosen your investment method, it’s time to do your research. This includes things like reading up on the different companies involved in the copper industry, familiarizing yourself with the risks and potential rewards of investing in copper, and deciding how much you’re willing to invest.

3. Open an account and start investing

The last step is to open an account with a broker or investing platform and start investing in copper. This process will vary depending on your investment method, but once you’ve done your research and are comfortable with the risks, it’s time to start putting your money into this essential metal.

If you don’t have a brokerage account and don’t know where to find one, take a look at the options below.

Pro Tip

Start small when you’re first investing in copper. This will help you get a feel for the market and how it works before you invest more money. Of course, as with any investment, there are always risks involved. But if you’re comfortable with the risks and do your research, investing in copper can be a great way to get exposure to this essential metal.

Pros and cons of investing in copper

As with any investment, there are benefits and drawbacks to investing in copper. Before you place money in the copper market, consider the following.

WEIGH THE RISKS AND BENEFITS

Here is a list of the benefits and drawbacks to consider.

Pros

Tons of ways to invest. Unlike some other metals, there are a ton of different ways that you can invest in copper. This includes everything from futures to mining stocks to ETFs.
Great way to combat inflation. Investing in copper can be a great way to protect your assets and even profit from rising prices during periods of high inflation.
Competitively priced against other metals. Copper is priced relatively competitively against other metals like gold and silver. This makes it a more affordable option for investors who want to diversify their portfolios without breaking the bank.
Industrial uses provide value to the metal. Over the last ten years, the total global copper reserves have increased from 630 million metric tons in 2010 to 870 million metric tons as of 2020. This increase in demand is due to the metal’s growing industrial uses, which provide value and stability to the market.

Cons

Demand can fluctuate with the economy. While the industrial uses of copper provide value and stability to the market, demand for the metal can still fluctuate with the economy. This means that there is potential for both short-term and long-term price fluctuations.
Not as much exposure. Copper doesn’t have the same level of exposure as some other metals like gold and silver. This can make it more difficult to find information and resources on investing in copper.
Investment risk. Like all investments, there’s always some risk involved when investing in copper. Futures contracts and mining stocks are the riskiest investments, while copper ETFs and bullion bars are safer options.
Storage costs. If you choose to invest in physical copper, you’ll need to factor in the costs of storing and insuring the metal. These costs can add up over time and eat into your profits.

Is investing in copper a good investment?

Many people believe that investing in copper is a good idea because it’s a metal used in various industries, including construction and electrical equipment manufacturing. Additionally, copper is a scarce resource, so its price will likely increase as demand grows.

However, there are also risks associated with investing in copper. For example, the price of copper can be volatile, subject to supply and demand shocks. Plus, copper prices are often influenced by global events, such as political instability or natural disasters. For this reason, investors must carefully consider all of the risks before deciding whether or not to invest in copper.

FAQs

What is the best copper stock to invest in?

There is no definitive answer to this question, as a variety of factors can influence which copper stock is the best to invest in. However, some experts recommend investing in mining companies with a strong track record of producing and selling copper.

It’s also crucial to consider the company’s financial stability before investing. Some high-ranking copper stocks include Freeport-McMoRan Inc. (FCX), BHP Group Ltd. (BHP), and Southern Copper Corp. (SCCO).

Can you buy copper stock?

You can buy copper stock from various sources, including online brokerages, investment firms, and even some banks.

Is it smart to invest in copper?

As an essential component in everything from electrical wiring to plumbing, it’s no surprise that copper is in high demand. What’s more, copper is a highly recyclable metal, which means that there is a steady supply to meet this demand. For these reasons, investing in copper can be a smart move.

But there are a few things to keep in mind. First, the price of copper is highly volatile, so it’s important to monitor the market closely. Second, while there’s a lot of demand for copper, there are also a lot of other metals that compete for attention from investors. So it’s essential to diversify your portfolio to minimize risk. With these factors in mind, investing in copper can be a smart way to ensure healthy returns.

Key Takeaways

Investing in copper can provide value and stability to your portfolio, but there are also risks involved.
Copper is a highly recyclable metal, which means there’s a steady supply to meet copper demand.
There are many ways to invest in copper, including buying stock in copper mining companies or purchasing physical copper.
Make sure you do your research and understand the risks before investing in copper.

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