Copper ETFs are available on the stock markets but many passive investors do not realise it! Gold and silver has recently been drawing all the attention away from other metals including the humble industrial metal; copper. Just because copper is a less valuable commodity does not mean that an investor should expect worse returns or more risk when investing in it. I recommend investing in a fund that invests in a broad basket of commodities, rather than specific metals. However selecting individual specialist ETFs such as a copper exchange traded fund and using them to compile a homemade portfolio may be more enjoyable!
Copper has a broad range of uses as an industrial metal. Copper is a good conductor of electricity, which explains its common usages in electrical cables and wires. As if that wasn’t enough, copper is used in piping and wire fencing, which uses a considerable quantity of the material.
Copper is easier to mine and more available than gold and silver, and is not called a ‘precious metal’. The current price of copper (as of July 2011) is $4 per lb (pound) of material, which is significantly cheaper than the $1800 per Oz (ounce) you need to pay for platinum. The reserves of copper above ground are significant, and strongly influence the price of copper because recycling is a significant source of the worlds copper.
Due to the low value of copper, physical copper ETFs would require unwieldy and large reserves of the stuff, which would result in crippling storage fees.
List of Copper ETFs
iPath DJ-UBS Copper TR Sub-Idx – (Ticker JJC)
iPathr Pure Beta Copper ETN – (Ticker CUPM)
First Trust ISE Global Copper Index Fund – (Ticker CU)
You can also invest in copper through industrial metals ETFs which spread investments across copper, aluminium, tin, zinc and other widely used metals. Copper has been historically very volatile in price. In Feb 2008 copper was priced at $8,550 per metric ton. In Feb 2009 it was almost at $3 ,000. This was caused by the anticipated fall in industrial demand for the metal following the recessions in developed nations. Prices have since tripled to $10,000 per ton. This should cause any risk-adverse investor to be very wary of holding copper in any significant quantity in their portfolio, and even adventurous investors should be only allocating a maximum of a few percent.
Find out more about the world of investing in commodities in our total guide of ‘How to Invest in Commodities‘, of which this page is a subsection.