Have you heard about copper etfs? These financial assets are very popular among traders who are looking to diversify away from things like stocks and bonds. These more traditional assets are great, of course, but it’s a good idea to spread your bets and to consider more exotic investments.
Copper is a very important metal. In fact, it is vital for the world economy. Electronics, infrastructure, health equipment, and numerous other things use and pretty much depend upon copper. Industry-wise, copper is an absolutely vital metal. In regards to trading, copper is actually the third most traded metal in the world. Given how important copper is to the global economy and various industries, this should come as no surprise.
Demand for copper has generally been trending up over the past several years. Copper has very good conductive properties, and is great for transferring electricity. Copper is also very soft and malleable, making it very easy to work with.
As a result, as developing countries grow, demand for copper has been increasing. Basically, copper is essential for electrical infrastructures and other things. As countries develop, demand for copper increases. When more people buy electronics, again copper is needed.
Copper prices, however, have not been trending up. There is a lot of copper in the world, and we are becoming better at salvaging copper from old electronics. This recycling of copper along with increased extraction means that the supply of copper is also quite high. Still, given the factors outlined above copper could turn out to be a great investment opportunity. Low copper prices now may actually be an opportunity to make a great investment.
A full breakdown of copper as an investment is beyond the scope of this article, so we can’t make a recommendation. Regardless, copper should be on your radar.
Copper as an Investment
There are several ways you can invest in copper. First, you can buy commodities and invest in copper directly. Second, you can buy copper futures. Futures are very popular for commodities and there are plenty of copper futures out there that you can purchase. Finally, you can also invest in a copper etf.
ETFs, or exchange traded funds, are mutual funds based on underlying assets, in this case copper. Unlike many other types of funds, however, ETFs are traded on markets. If you want to buy most traditional mutual funds you have to go to the mutual fund company. If you want to buy an ETF, you can trade it on markets just like stocks and other similar assets.
As with all funds, assets are basically pooled together. Then, investors can buy “slices” of these assets. If you buy copper etf 3x, you will be buying etfs that are based on copper, or in some cases copper mining companies. The ETF will rise or drop as the value of copper, or the value of copper companies, rise and fall.
Unlike futures, an ETF usually won’t expire. Unlike commodities, you don’t have to invest directly in copper. With an ETF, a fund manager will take care of all of the complications for you. In exchange, you will have to pay fees to the fund manager. This can reduce your profit potential, however you’ll know that your assets are in professional hands.
Making Money When Copper Prices Fall
Copper etfs are a great way to invest. If you’re not feeling confident about copper, you could short copper etf just like you can short stocks. So if you believe copper is over valued, you should consider a short sell.
You could also invest in an inverse copper etf, which will gain value if and when copper prices decline. These inverse etfs are perhaps a better investment than short selling because risks are muted. If you believe that copper prices will rise, on the other hand, you should simply invest in a copper etf.
Copper prices have declined substantially over the past five years. Had you shorted copper, or invested in an inverse copper fund back when prices were high, you would have made a lot of money. Now, it’s possible that copper prices have bottomed out given the many years of declines, so keep that in mind if you’re looking to bet against copper.
Conclusion: Copper an Interesting Investment
Either way, whether you want to buy or short, ETFs and commodities should be considered by every investor. These assets offer a great way for people to diversify their portfolios, and to invest in potentially high earning assets. Copper is a very popular metal, so markets for copper futures, ETFs, and other assets are quite liquid and active.
Of course, you should take some time to study up on how copper markets work. There are many factors that can influence copper, and whenever you invest, you need to make sure that you know how specific markets work. As with basically all markets, it comes down to supply and demand, but understanding the details of these markets is much more difficult.