Copper ETF, what is it?

Copper ETF, or exchange traded fund, is considered to be the new investment rage, with a decent turnover reported. In the past, precious metals such as Gold and Silver were in high demand, and were the preferred stock of investment for entrepreneurs. Now, they have to take a step aside, enter copper. Copper ETFs provide investors the opportunity to buy copper, and sell back, though not always physically.

Copper as of recently has seen a huge demand, in diversified fields, such as for industrial applications and used in household appliances, making it very versatile, and a viable investment option. It is used in heating and cooling units and systems, in electrical wires and plumbing, and even now in infrastructural works. Considering these multitude of uses, it is only inevitable copper demand will continue to increase. This ideally makes investing in copper ETFs a sure thing for years to come.

 Copper ETFs are considered low risk, compared to metals such as Gold and Silver, who command larger investments and substantially higher failure rates, and are suitable for new investors trying to become acquainted with the system, or investors seeking low risk ETFs. And, not because it is safer means you compromise profits, actually copper has seen an increase on around 30% demand and subsequent value in just the past two years, contrary to gold who has seen fluctuating fortunes. Currently there are quite a few countries with projected increases in demand for the valuable resource, at an annual rate of about 7%. Coupled with its’ sometimish shortage of supply and steadily increasing demand, the price is also forecasted to increase significantly.

There are many copper ETFs around the globe, but some perform better than others.

The safest and most popular for 2011 thus far are:

• Global X Copper Miners ETF(COPX)
• iPath Dow Jones Copper Index ETN(JJC)
• First Trust ISE Global Copper Index Fund(CU)
• PowerShares DB Base Metals(DBB)
• iShares MSCI Chile Index(ECH)

It is important to note there are also possible negative effects too, for example should the demand for copper drop, the value of the investment would start to see a downward trend.

However, with technological advancements, it is not impossible to make a substitute completely for copper, although currently none exists. Finally, if the risk seems too great to take, consider diversifying your investments, to buffer possible losses.

China as one of the main players in the copper market.

When talking about copper ETF and the possibility of investing in it we can not overlook how big of the player in this market China is. China global GDP is roughly 60% of the combined Asian GDP. The country produces in the vicinity of 20-30% of its own copper and has to import the rest. Given that China is one of the most economically stable and emerging markets there is a safe bet to say that future of copper is somewhat guaranteed in years to come. Right now China is similar to what the USA was in the 30ties of the previous century. It is growing. The demands for copper are huge and are only bound to increase.

Recent updates:

A CNBC article states that investor’s growing concerns about commodity market in China, given its natural slow down in growth, are increasing. The industry top market experts are saying that  China’s incredible momentum in building their infrastructure has secured the copper market for years to come.

Market research shows that China has allocated more than $40 billion for the power grid update. The power industry in China is consuming 50 percent of country’s total copper demand.

Money Samurai is closely watching the copper inventories and they are on their lowest level since 2009. A temporary shortage of copper is expected in the first 2 quarters of 2012. We would really suggest our reader to start tracking copper futures for any upward movement at this point. As of 3/15/2012 any price of copper below $3.65 is looking like a good buy.