Copper has surged from just under $3 per pound to just shy of $4 a pound over the past calendar year. That’s a gain of 33 percent, and that means copper has risen faster than the price of gold over the same period of time. There are a number of real and perceived reasons for the rise, but chief among them has to be the looming threat of inflation. If the dollar continues to fall, the true cost of copper will rise relative to the fall in the dollar. That – coupled with growth in India and China – has investors pouring into the conductive metal ore.
Copper isn’t as glitzy or glamorous as gold or silver, but in many ways it feels safer. Since copper is regularly used in electronics, it’s consumption per person (particularly in the developed world) has been on the rise for decades. So how does one invest in copper?
The simplest way, of course, is through the purchase of copper mining stocks or ETFs. Here’s a quick primer on some of the players in the industry a jumping off point for further research:
1) Try a copper ETN. Want to get some exposure to copper without investing in a single company? Try the iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSE:JJC). This copper ETN invests in copper futures contracts traded on the COMEX. JJC is up 30.7 percent over the past year with most of that rise (23 percent) taking past over the past three months.
2) Invest in specific mining stocks. ETNs and ETFs offer a measure of protection against the extreme price volatility inherent in investing in a single copper company, but the promise of large gains is also limited. Investing in a moderate-growth copper mine could outstrip performance in the iPath Copper ETN (JJC). Here’s a look at a few copper stocks of note:
- Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX): A mature and stable company with a market cap of $50+ billion, FCX mines copper and gold
- Rio Tinto (NYSE:RIO): Another large company with a diverse portfolio of mines, Rio Tinto extracts aluminum, diamonds, coal, even uranium and gold in addition to copper
- Southern Copper Corporation (NYSE:SCCO): A focused copper miner, shares in SCCO have surged 20 percent in the past month
- Augusta Resource Corp. (AMEX:AZC): A smaller, more speculative play on copper and silver, AZC owns the Rosemont copper property in Arizona. The stock’s up just 1 percent over the past month, but I wouldn’t be surprised to see it pop if the price of copper continues to rise
- Taseko Mines Limited (AMEX:TGB): A riskier copper play, TGB has see-sawed in price as the Canadian government green-lights then red-lights TGB’s fabled Prosperity mine. The latest news is TGB won’t be allowed to mine the Canadian Prosperity mine, but I’m not so sure of that. If the company does get the green light, this stock will be back over $6 in a day or two. Keep an eye on it for further developments.
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Another inexpensive way to invest in copper is buying copper bars and coins. There are various reputable precious metal dealers online that offer copper bullion bars/coins. (Self-promotion here) Since I work for Provident Metals, I would highly recommend them:) http://www.providentmetals.com/bullion/copper.html
Thanks for the comment Pat… I should do a post on buying copper bullion. Up for an interview or is there anyone I could contact at provident?
I was thinking of possibly obtaining some copper bullion though I am admittedly starting from a point of total ignorance. But so far, the prices at which I find it available are a bit off-putting. The price of copper is around $4 per pound, and the price of bullion is at about $10 per pound, (not even considering shipping). According to my admittedly questionable math, the price would have to go up 250% just to break even! That’s not counting any further expenses and assuming I could sell it at spot. Maybe you could clear up my confusion, cause there must be something I’m overlooking. If not, copper bullion would be certainly one of the WORST investments I can think of.
Agreed. Copper bullion has a huge markup in part because it’s truly an industrial metal. Storing copper as an investment at your house in meaningful quantities is impractical. I’d recommend buying shares in copper mining companies or investing in copper ETNs if you want exposure to copper. Alternatively, there are some decent deals on copper on eBay.
You DO NOT invest in any stocks of copper or silver or silver. You need to buy and have the PHYSICAL METAL. Anything else is a risk and potentially just wiped out in a crisis. You need to have the gold silver or copper in your hands and safe in forms of bullions or coins or you will be sorry!
I agree, physically have it in your possession in a safe at home, and make sure that sucker is bolted to the floor!
ok, so I have 100 ounces of silver in my safe, copper would be a good addition too.
I have started buying copper pennies before 1981, which has 95 percent copper in them; however it is currently illegal to melt u.s. pennies– so what do I do?
I think it’s only illegal to melt down US pennies in the US, just as it’s illegal to melt down Canadian pennies in Canada. Solution, take a vacation to Canada or Mexico and take your pennies with you. It shouldn’t be too hard to find someone in either country to melt them into ingots. Check online and set it up ahead of time.