ETF’s and ETN’s
Copper ETF’s and ETN’s are possible methods of investing in copper. ETF’s, or exchange-traded funds, are investment funds that are traded on stock exchanges in a very similar to stocks. They hold assets, such as commodities, bonds, or stocks; and they trade close to their net asset value over the duration of a trading day. ETF’s are a good fit for investors looking for a low-maintenance investment. Two options for ETF’s include choosing a broad-based metal ETF, or going with a “pure play” option of the iPath Dow Jones-UBS Copper ETN (JJC, which delivers returns based on a future-based strategy.
ETN’s, or exchange-traded notes, are debt instruments linked to the return of a certain asset class. There are two primary options for ETN’s: 1) Global X Copper Miners ETF (COPX) and 2) First Trust ISE Global Copper Index Fund (CU). Both ETN’s invest in stocks of companies who’s revenue is derived from the sale of copper, but COPX offers more of a pure play on copper mining companies.
Copper futures are stocks that are traded on the London Exchange (symbol CA) or the COMEX division of the NYMEX (symbol HG). Under the COMEX division of the NYMEX, one contract is equivalent to 25,000 pounds of copper. But copper futures are subject to NYMEX position limits. Under the London Exchange, one contract is equivalent to 25 tonnes.
You can choose to physically invest in copper by purchasing and storing actual copper metal. And since copper is cheap, you can take advantage of buying in bulk for a good start. You might be thinking pennies, but don’t. Pennies are made of a mixture of zinc and copper, and not strong assets for copper investors. Look for copper sheet metal, rolls, and wiring instead, for a more valuable inventory. You may also choose an ETF that gives access to physical copper. For instance, the Securities Physical Copper ETF trades on the London Stock Exchange under PHCU.
You can choose to purchase stock of companies that engage in the mining and selling of copper metal. Buying copper stocks is not a bad idea. But choose from the wide selection of companies, carefully. The profitability of these companies largely depends on the current market value. Companies that focus just on copper metal include Jiangxi Copper Company, Freeport Copper, Equinox Minerals, Lundin Mining Corp, and XStrata PLC.