From pennies to motherboards: how you could be missing out by not owning copper.
Recent copper market numbers have pressured the metal into a downward trend, with prices hovering right around three dollars per pound and levels plummeting to three-year lows.
Yet anyone who thinks copper is fading out of the game knows little about how broadly the red metal reaches all corners of the investing world.
Historically, copper has been in the shadow of gold and silver bullion. However, now may be an excellent time to get in on this industrial-metal-powerhouse well below the price of other precious metals — and before prices begin to rise.
Here are five reasons not to write copper off as a wise long term investment option.
1. An Industrial Metal
It may seem like gold is the only thing metal investors talk about, gold and more gold. Yet copper is arguably the most useful industrial metal, found in a variety of household appliances and everyday items.
Copper is a conductive metal used heavily in the manufacturing, construction, electrical, technological, and auto industries — some of the most important driving forces behind the development of a country. In fact, a common recommendation for investing in copper is “invest in copper if you believe in growth.”
2. Copper and the Housing Market
Another industry that relies heavily on copper is the housing market. Copper is used to make sinks, wires, connectors, electrical springs and doors, appliances, polished coverings and much more. One house may not contain a significant amount of copper on its own, but added up across the United States and the rest of the world, the demand is significant.
The relationship between copper and the housing market means that just as the industry relies on copper, the price of copper is inversely affected by the housing market. That’s why it’s crucial to research the latest copper news when viewing housing market trends.
In recent months, the housing market seems to be rebounding after the crash of 2007. That’s good news for copper investors and an indicator of possible better times ahead.
3. Growing Global Demand
China, the world’s largest consumer of copper, accounts for nearly 40% of total copper consumption. As a whole, Asia burns through more than half of the world’s supply of copper every year — a figure expected to rise as the urbanization of millions of people in the region continues.
Chile, the world’s number one producer of copper, and much of Europe account for a large chunk of global copper consumption. With so many industrial applications in different markets all around the world, the demand for copper is constant and steady. But what about supply?
4. Copper Production
In 2012, the International Study Copper Group estimated that copper demand exceeded production by 400,000 tons — the third consecutive year of production deficit. However, a recent mine expansion in Chile, along with new mines in Indonesia, Mongolia and Peru, will result in a 6.4 percent output increase, according to the group, which may reduce already-low global copper prices in the short-term.
Even still, positive manufacturing data out of China, Europe and the U.S. have most analysts predicting a rise in long-term copper prices. As confirmation, Kitco recently reported that: “BMO lifted its long-term average price forecast for copper to $3 a pound by 2017, up from $2.75, saying that an estimated 3.2 million tons a year of ‘greenfield’ development is needed to meet demand over the next decade.”
5. Portfolio Diversification
Finally, by incorporating copper into your financial portfolio, you are reducing risk and adding stability to your assets.
Any experienced long-term investor will tell you that diversifying, at least to some extent, is much less risky than placing all of your assets in one basket. By investing in multiple sources, you are less likely to suffer from unforeseen downturns.
When deciding what to invest in, only an amateur (or experienced day-trader) uses the short-term, day-to-day market fluctuations to form their decision. The savvy investor looks at the big picture by thinking about the longevity of the asset. And considering the fact that the use of copper dates back thousands of years — along with its endless list of practical modern uses and limited supply — copper investments are worth a look.
If you are considering ordering copper bullion as an affordable defense against inflation, contact our expert precious metal dealers at Provident Metals. Check out our copper buying guide to browse our selection of coins, bars, rounds, and even copper bullets.
What are your thoughts?
Will you be investing in copper in 2014?
What is your favorite copper piece?
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Michael says
I have been saving copper pennies from 1982 and back for quite some time. I bought a penny sorter on ebay. It will sort 95% copper pennies from zinc pennies. An entire bank box is done in about an hour. I simply re wrap the zincs and take them back to the bank. I re wrap the coppers and put them in a bank issue cardboard box. And that is how I keep copper at face value. Off course wheaties are put to the side when I find them.
Drake Dequeant says
Unless you get copper for free, it ain’t worth it. Spend them copper pennies and buy silver.
P.S. Not the Wheaties!
John Diaz says
Copper is very attractive, that’s how I found out about Provident Metals; with gold and silver if I wanted to liquidate I can go to any coin shop down the street, but with copper it’s not so easy. So my biggest concern is when the time came to sell where would I go and who to call to sell it?
Michael says
You an go to your local salvage yard (scrap yard). Hpe this helps.