How To Invest In Copper

By Alexandra Kerr. May 7th 2016

Investing in in precious metals like gold and silver has become a popular choice for many investors looking to hedge against economic downturns, decade after decade. Copper, though not considered a precious metal, has gained popularity and value, making it another viable choice for commodities investment, and further protection against deflation and the fall of paper currency.

Why Should You Invest In Copper?

Not previously viewed as being equally desirable to gold or silver, copper prices remained lower than its precious metal counterparts. Given the surge in interest and commodities investment, copper has risen in popularity and in value, making it a good choice for investors looking to get in at the ground floor.

What Is Copper Used For?

Though bought and sold as a commodities investment, copper is regularly used in electronics as it is conductive. Another field increasingly using copper is the construction business. Copper features for wiring, plumbing, cooling and heating are common fixtures on a build site, and have become so sought after, they are often the most stolen items from a construction zone. Copper can also be found in cars, used for the motor, wiring, radiators and bearings, as well as telecommunications hardware. With the number of industries requiring copper for their basic materials growing daily, it's no wonder investor's interest in the metal has grown just as rapidly.

Forms Of Copper

Like other metals, copper can be purchased in its physical or bullion form, or an investor can buy stocks in copper companies, as well as copper exchange traded funds.

ETFs or ETNs

  • If you prefer to invest in multiple copper mining companies, rather than having to choose a single one, consider investing in copper exchange traded funds or notes, both of which invest in multiple companies. Traded on a major exchange, ETNs offer the ability of the investor to hold debt security until it has reached maturity. Once maturity is reached, the investor receives a cash amount equal to the day's index factor value of the principal amount.

Investing In Copper Mining Company Stock

  • Investors can also select a specific copper mining company to invest in, potentially increasing the possible gains, while also increasing the risk factor. Placing your money in a single company rests the investment's success or failure in one area, whereas ETFs and ETNs can still potentially see gains despite the decrease in value of a single company. Investing in specific stocks does find its appeal in the ability to potentially increase gains more than an ETF or ETN, as only one company is required to succeed in order for your investment to grow, rather than several.

Copper Bullion

  • Like other metals, copper can be purchased in physical form as bars or coins. Currently, United States pennies are circulated as copper-coated currency, making this form of bullion incredibly accessible, though not highly valuable, as it is not solid copper. Pre-1982 pennies, however, are solid copper, not only making them more valuable than their contemporary counterparts, but actually worth more than their established currency value (one cent). This notable advantage of copper pennies over copper bars gives investors the ability to obtain pennies at their established currency value, one cent, and immediately receive a return on the physical copper's value, which is actually higher. Bullion bars, however, are not used as currency, and can only be bought at the price of the copper's physical value.
  • Bullion bars are a better way to invest in larger amounts of copper, and are available from several mints. Bars come in a range of sizes, and can be purchased at your desired investment or budget limit. Because copper is not as valuable as other metals, more of it is often purchased, making bars a practical solution over pennies.

Where To Invest In Copper

If you choose to invest in copper bullion, find a reputable metal dealer with a proven track record. Typically, the longer the company has been in business, the more reassured you can be of the value of their service, as well as their product.

If you are new to investing in copper, and want to purchase stock rather than bullion, consider investing in an ETF or ETN to incorporate several mining companies into your portfolio. Over time, as you learn more about which copper mining companies suit you and have performed well, then try investing in their specific stock.

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