Copper Investment Ideas: What To Know About Copper Investing
As the economy continues to recover, smart investors are looking everywhere for opportunities. While metals like gold and silver are typically go-tos for most investors, a new metal is emerging at the top.
After a major slump in 2020—something felt across the global supply chain—copper has picked up steam over the past year.
Thanks to the continuing push for green technology and new construction, copper demand is stronger than ever and not showing signs of stopping.
While others will undoubtedly stick with the precious metal investments, you, the savvy investor, should take this moment to learn more about how to invest in copper.
Flow-Through Financing in Canada
You may have doubted copper’s value as an investment in 2020, but things are different in 2021.
Since the announcement of an effective vaccine and its global distribution, copper demand has quickly picked up. Coming out of Q1 of the year, copper was rallying into the second quarter of the year.
In Q2, specifically in May, copper reached a record trading high of $10,724.50. Despite not finishing the quarter at this peak, copper managed to close at $9,382.
Many experts expect the demand for red metal to remain strong for the rest of the year. Although it may not reach that record-high number again this year, there’s speculation that the momentum could carry into next year.
After all, the world’s economy is still recovering and will likely continue that recovery into 2022. No doubt, there will be plenty of opportunities for investors who know where to look.
Key Industry Metrics
Before you learn how to invest in copper, there are some things you should know about copper. Understanding the process of extracting copper, what an ore grade is, and other key terms will help you avoid mistakes when choosing where to invest.
Understanding Ore Grade Measurements
When you hear someone talking about ore grade, they refer to the percentage of copper oxides or sulfides inside the mined rock. Copper oxides and sulfides differ in that there is a higher percentage of copper in sulfides than oxides.
However, copper oxides usually reside closer to the earth’s surface, making them easier and more cost effective to extract. On the other hand, copper sulfides are deeper and more difficult to extract, making it an expensive project. So you should not assume that a mine is more valuable because it has a higher ore grade.
It’s not likely that you’ll find a mine or mining company only looking for copper. Instead, companies often extract other metals in tandem, such as gold, silver, zinc, and lead, to name a few.
The mining company will then sell those by-product metals for a profit. This makes sense for the mining companies because it helps them offset their costs for extracting their primary objective.
Net Cash Costs per Pound of Copper
Using the net cash costs per pound equation, you can calculate what it costs a miner to produce a single pound of copper. This calculation takes into account by-product credits as well, which helps reduce the overall costs for producing the red metal.
Since the by-products are typically sold in raw form, the miners don’t have to spend more on processing them into pure forms. The lower a miner can produce copper per pound, the more profitable they will become.
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Green Revolution Without Copper Is Not Possible
No matter how you feel about climate change, the “green revolution” without copper would not be possible. Some countries and states have already taken steps to ban gas-powered cars, clearing the way for electric vehicles.
And the demand for electric vehicles has put copper in the spotlight. The red metal will play an integral role in the shift to green technology.
In fact, to create just 1,000 EV (electric vehicle) batteries, you’d need approximately 83 metric tons of copper. If you think that number is big, try to imagine how much copper would be needed to produce 1 million EV batteries.
So long as the demand for green technology continues to grow, the demand for copper should continue to be strong.
Keep your eyes open for investment opportunities in green technology and related material. Many of the devices and pieces of equipment will need conductive metals like copper.
And since copper is relatively cheaper than other metals with similar properties, it’s an affordable investment that could lead to significant returns.
Ways To Invest in the Copper Stock Market
If you’re looking for copper investment ideas, you’ve come to the right place. The copper forecast for 2021 looks bright with the potential to be even brighter.
Of course, you’ll need to place the right bets to cash in on copper. So, let’s get into how to invest in copper and where other investors have had success.
You have two main options for copper investing: buying shares of a copper mining company or placing your bet on an ETF. Both of these options can be safe bets, but you’ll need to stay vigilant.
If you want to invest in a copper mining company, you’ll need to decide whether you want to go with a company that mainly produces copper, or a company that produces a number of other materials as well.
Regardless of your choice, the more important issue is the health of the company you choose. Do they have a strong balance sheet? What about their level of debt? And how much do they expect to grow? These are all questions you must ask yourself before investing in a company.
Your other investing route is ETFs; however, there are not many ETFs focused on copper. Instead, you’ll likely come across ETFs that cover most of the mining industry. ETFs work especially well for investors who do not like to be hands-on and do a ton of research on their own.
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