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What Are the Best Tips for Copper Investment?

A pot made out of copper.
A copper bracelet.
US pennies made after 1982 are only coated in copper.
Copper wire.
Small nuggets of pure copper.
Article Details
  • Written By: Jeany Miller
  • Edited By: O. Wallace
  • Last Modified Date: 22 October 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
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Volatile stock markets and shaky economics have forced many people to diversify their investment portfolios. One consideration in precious metals investments may include that of copper. Before making a purchase, however, people need to acknowledge the different ways in which a copper investment may be undertaken. These methods may include exchange traded funds, coins, bullion bars and copper ingots. Once the investment methods are established, an investor may also need to comparison shop and research the likely future markets for copper.

Copper is often considered one of the most useful metals on earth. It conducts electricity, is a component in many mobile phones and bends easily for computer circuitry boards. Many major industries, including engineering, transportation and construction, utilize copper for functioning or building.

Today, burgeoning industrial growth in India and China has impacted the copper market. International demand is expected to further influence this market as developing countries continue to build wealth. These factors, coupled with a decreasing global supply, mean copper investment may be a powerful way to expand one’s wealth. To illustrate, copper prices on both the New York Stock Exchange and London Stock Exchange have increased steadily since February 2006.

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Copper investing can often be done in a number of ways. Common investment methods include the physical purchases of copper bullion bars, ingots and coins. Many precious metals investors also consider copper to be a valuable commodity on the exchange traded funds (ETF) market. This consists largely of index funds that often trade like stocks within major stock markets. Index funds, however, may allow for diversified portfolio management without the administrative fees often associated with stocks.

The ETF market for copper is not physically-backed, although this may change in the future. Some exchange-traded funds provide returns on the spot price of copper as well as the slope of its futures curve. Many investors, however, are uncomfortable with this type of note because funds may lag behind the expected return on spot prices. Individuals who are new to precious metals investing are often encouraged to avoid these funds.

Another option for copper investment on the ETF market is with emerging markets metals and mining. Unlike futures contracts, these are stocks from companies that mine and extract metals. This index may be composed of diversified mining firms as well as companies that concentrate on such specific resources as gold, platinum and copper. Some investors speculate drivers of this fund may imitate those that influence global copper prices.

For some people, the purchase of copper coins may be an investment option that requires less analysis. American pennies issued before 1982, for example, are essentially composed of copper. Those pennies issued after 1982 are merely coated in copper. Some coins issued in the United Kingdom and Africa also contain copper. Any of these may be available for purchase from local banks, coin investors or dealers and auction houses.

Unlike many goods measured in standard ounces, precious metals are measured by the troy ounce. These two units are not the same, and those interested in a copper investment should be aware of the difference. This is because a troy ounce is more than 9.7 percent heavier than a standard, or avoirdupois, ounce.

Copper bullion bars are often available from a variety of mints in many different troy ounce measurements. Some investors consider these easier to store than coins, as a sizeable position in copper may require more space than that of gold or silver. However, purchasing discounts are likely unavailable with bars, whereas coins may be available for face value with an immediate return. A hybrid copper investment solution that combines bars and coins may therefore be the best option.

Some manufacturers collect scrap metal and melt it into copper ingots. These may offer another way for investing in copper, as they are likely to be cheaper than bullion. The drawback, however, is that ingots are unlikely to guarantee the quality that may be found with bars and coins.

Before choosing whether or not a copper investment makes sense, potential investors often need to shop around for the best prices and highest quality. Mints are, in many cases, the best places from which to purchase copper. Dealers, however, are often readily available online and in traditional retail stores. Comparison shopping may therefore provide an investor with the best return. Moreover, with any investment in precious metals, people often need to determine if worldwide production is available, if new supply sources exist and if potential replacement products may be found in the future.

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