Since the pandemic started, the price of copper, one of the world’s most useful metals, has skyrocketed, reaching a decade high of US$10,000 per metric ton in May.
Prices recently fluctuated in response to reports that China might attempt to curtail the current global commodities boom, providing investors with an opportunity to invest in a metal that is likely to remain in high demand.
Here are several reasons why copper is about to resemble a precious metal and some investment ideas.
What makes copper so great?
For jewelers, this metal comes in third position behind gold and silver, while it tops the list for contractors and engineers. It is strong, flexible, and has excellent electrical and thermal conductivity.
Copper is used in plumbing and electrical systems in your home, industrial gear, and the bottoms of pots and pans.
Due to the wide range of applications, the base metal is frequently referred to as “Dr. Copper” for its capacity to assess the state of the economy as a whole. The price of copper is once again accompanied by the pandemic’s recovery, which is well under progress.
But even while the global economic recovery is one element that makes copper more desirable, a number of significant projects and trends are anticipated to keep driving up demand.
Why demand could increase even further
Expect copper to play a significant role in any construction projects as the U.S. moves through with plans for significant infrastructure improvements targeted at mending its decrepit roadways and bridges as well as renovating airports and transit systems.
The fact that copper is essential to the transition to electric cars and sustainable energy sources is yet another piece of good news for investors in Canada’s resource-rich country. Two to four times as much copper is needed for electric cars as for gasoline-powered ones.
In hospitals and other healthcare facilities attempting to stop the spread of infection in the wake of COVID-19, copper’s antibacterial capabilities may also prove useful for high-touch surfaces.
According to BNN Bloomberg resources expert Andrew Bell, copper is up 30% this year, and current trade levels have the commodity close to its record high from 2011.
What is the best approach to invest in copper?
- Bouillon. The metal might simply be purchased by investors in the form of coins or bars to be saved and later sold. However, storage space can become a problem if you plan to make a sizable investment.
- ETFs. Exchange-traded funds (ETFs) for commodities provide a more straightforward way to obtain exposure without needing to buy the commodity itself. You can focus on a specific commodity with some commodities ETFs, while others aggregate them for broader exposure.
- Stocks. Purchasing stock in a specific copper mining business is an additional choice. Remember that due to business factors including the company’s finances, the caliber of its management team, and long-term production expectations, the stock’s performance won’t exactly follow that of copper.
- Futures. Using futures contracts, investors can wager on the price movement of a specific commodity. In futures, buyers and sellers agree to exchange a certain commodity at a specified price and time in the future. Given the volatility of most commodity prices, beginner investors should use great caution while trading copper futures on platforms like the COMEX and London Metal Exchange (provided they have a brokerage account that supports it).
What dangers exist?
Not everyone should invest in copper. Copper may be more susceptible than most to large price fluctuations than other commodities.
Nearly half of the copper mined worldwide is produced by Chile, Peru, and China, with Chile producing more than a quarter of that total. Governmental decisions, labor disputes, and other local disturbances can all have a significant effect.