{"id":7405,"date":"2023-12-27T07:23:00","date_gmt":"2023-12-27T07:23:00","guid":{"rendered":"https:\/\/thewealthcircle.com\/?p=7405"},"modified":"2023-12-27T08:26:56","modified_gmt":"2023-12-27T08:26:56","slug":"how-to-invest-in-copper","status":"publish","type":"post","link":"https:\/\/kiiky.com\/wealth\/how-to-invest-in-copper\/","title":{"rendered":"How To Invest In Copper | Updated","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Investing in copper has probably been around the longest, however, most people focus on the prominent metal, Gold<\/a><\/strong>. In this article, we are going to educate you on how to invest in copper and help you figure out if it\u2019s the best investment choice for you.<\/p>\n\n\n\n

Copper is the unassuming metal that has spent millennia as a third fiddle to gold and silver, its more prestigious counterparts in Group IB of the periodic table. Copper is such a third-rate metal that it has to be alloyed with tin before it’s used to make Olympic medals. Despite copper\u2019s status, it\u2019s among the most versatile metals in existence.<\/p>\n\n\n\n

Why Should I Invest In Copper?<\/span><\/h2>\n\n\n\n

The copper industry supports sustainable economies. According to the leader of one global mining company, the global mining industry drives almost half of the world\u2019s Gross Domestic Product (GDP), either on a direct basis or through the use of products that facilitate other industries. <\/p>\n\n\n\n

Mines create employment opportunities, support and strengthen community public transportation systems, commercial\/business infrastructures, and community energy demands, and enable farmers to produce more and get their products to markets. <\/p>\n\n\n\n

The copper industry outlook is also looking positive for the global economy. A 2016 report from the Internation Council of Mining and Metals notes that the mining industry is a major force in the world economy, emphasizing many low and middle-income countries depend on mining for national economic success. ICMM case studies show that foreign exchange earnings from mining can create positive developmental effects. In many countries, the mining and metals industry contributes to job creation, poverty reduction, and an increase in the quality of life.<\/p>\n\n\n\n

According to Copper Alliance<\/a>, we can rest assured that the availability of Copper is guaranteed as copper is located in the Earth\u2019s core. Global copper reserves are estimated at 870 million tonnes (United States Geological Survey [USGS], 2020), and annual copper demand is 28 million tonnes. These copper resources are estimated to exceed 5,000 million tonnes (USGS, 2014 & 2017).<\/p>\n\n\n\n

Key Metrics<\/strong><\/span><\/h2>\n\n\n\n

Ore grade:<\/strong> An ore grade measures the percentage of copper oxides or sulfides in a rock. A commercial copper deposit will usually contain between 0.5% to 1% copper ore as well as other metals and such as gold<\/a><\/strong>, silver, molybdenum, lead, and zinc. While higher ore grades typically suggest a mine is more valuable, however, that’s not always the case. <\/p>\n\n\n\n

By-product credits:<\/strong>\u00a0A by-product credit is a cash payment that a mining company receives for producing another metal as a by-product of mining its primary target. <\/p>\n\n\n\n

For example, most copper mines contain small quantities of other raw minerals that a miner will sell to another company for processing.<\/p>\n\n\n\n

Net cash costs per pound:<\/strong>\u00a0This metric measures what it costs a miner to produce a pound of copper after factoring in the benefits of the by-product credits. <\/p>\n\n\n\n

For example, it cost mining giant Freeport-McMoRan $2.05 per pound to produce copper out of its North American mines in 2018. <\/p>\n\n\n\n

However, because these mines also produced some gold and silver, Freeport-McMoRan was able to sell those precious metals in their raw form to other miners for processing. <\/p>\n\n\n\n

The by-product credits it received from those sales helped reduce its net cash costs by $0.26 per pound to $1.79 per pound of copper, thereby improving the profitability of its mines.<\/p>\n\n\n\n

READ ALSO: 11 Top Metal Trading Companies in 2022<\/a><\/strong><\/p>\n\n\n\n

What Are The Factors Affecting The Copper Market?<\/strong><\/span><\/h2>\n\n\n\n

One of the biggest factors affecting the price of copper is demand<\/strong>. Copper is a material used in a lot of applications, including new construction and remodeling. If economies are growing, then the demand for new construction and more copper also grows along with it.<\/p>\n\n\n\n

Another factor is that supply<\/strong> may increase or decrease over time, the trend tends to show an overall decrease in the amount of copper being mined. Copper production comes mainly from America, Europe, and Asia, which combine for more than 90% of the copper produced in the world. As less copper is produced, the more precious of a commodity it becomes, and thus the higher copper prices tend to be.<\/p>\n\n\n\n

The increase in various\u00a0hedge funds<\/strong>\u00a0that have a focus, or at least a partial focus on commodities also affects copper prices. Managers of these funds look at data and try to determine supply and demand statistics. <\/p>\n\n\n\n

This has a real-world link, such funds can increase instability in copper prices, especially in the short term. In the past, prices tended to change more gradually but there are more spikes, both high and low in the current marketplace.<\/p>\n\n\n\n

Stockpiles<\/strong>\u00a0help to offset some of those pressures on copper prices, may be used with more regularity. Copper stockpiles reached their lowest levels in six years in 2010, which led to higher prices that year. <\/p>\n\n\n\n

As long as demand continues to outpace production then copper prices will likely continue to remain high. The use of existing copper stockpiles is however a short-term solution to pricing pressures.<\/p>\n\n\n\n

How is Copper Traded?<\/strong><\/span><\/h2>\n\n\n\n

The most common financial instruments for trading copper are:<\/p>\n\n\n\n