Invest in Copper and Copper Mining Funds
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Why invest in copper?
Key takeaways:
- provides exposure to the green transition
- crucial in the production of green tech products
- demand is expected to rise in the coming years.
Investing in copper is an excellent way to gain exposure to a metal with significant industrial use, crucial to the transition to a greener world. Diversified exposure to copper can be achieved through a copper mining investment, purchasing copper funds focusing on companies involved in copper mining.
Investing in copper
Copper (Cu on the periodic table) is the second-best conductor of electricity (after silver). As copper is cheaper than silver, it is primarily used when larger volumes are required. By investing in copper, you get exposure to a metal that contributes to the green transition.
By monitoring the price of copper, it is said you are able to predict the overall health of the world economy, hence the term "Doctor Copper" was coined. Generally, rising copper prices indicate strong demand for copper and, therefore, a growing global economy.
The demand for copper is expected to increase in the coming years, a major reason being the electrification of our society. As copper is used in cables, electric motors, batteries, electric cars, and wind turbines, among others, an increased demand for these products will affect the price of the metal.
Copper also plays a crucial role in human space exploration. Due to its excellent ability to conduct electricity and heat, copper is the third most used metal in rockets. For instance, the inside of rocket engines is protected by a layer of copper – the temperature in the engine can reach close to 3,000 degrees.
Copper Price Per Pound (lb) In Swedish Krona (SEK)
The chart below shows the price of one pound (lb) of copper in swedish krona (SEK). A pound is 453.592 grams.
The chart is provided by Tradingview.
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How to invest in copper?
There are several ways to allocate your portfolio towards copper. You can, for example, invest in copper by making a copper mining investment, purchasing stocks of mining companies that extract the raw material, by purchasing commodity funds that include copper, or by buying derivatives.
- Stocks: Buy shares in the companies that extract raw copper.
- Funds: Invest in a copper commodity fund that provides direct exposure to the raw material, or to the companies that extract it. There are different types of funds. When investing in a fund, you pay a fee for an expert fund manager's selection of underlying assets. There are mainly two types of funds:
- Daily traded fund: Often actively managed, meaning an expert regularly reviews the holdings and rebalances.
- Exchange-traded fund: A basket of securities that follows an index and trades like a stock.
Invest in copper - return profile
The price of these companies' shares tends to move in correlation with the price of the metal and, in addition to this, they provide dividends, which wouldn't be obtained from a direct investment in the metal. If you want to invest in copper directly, you can buy derivatives that follow the price of the metal.
Why invest in copper with AuAg Funds?
While copper is crucial for the green transition, mining companies also account for a significant portion of harmful emissions. AuAg Funds only invest in the best-in-class copper mining companies, excluding those that lag behind in their sustainability work and rewarding those striving to become even more sustainable. In this way, we can create an even greater net effect for the world.
AuAg Funds invest in copper through the following funds: AuAg Precious Green and AuAg Essential Metals.
AuAg Precious Green
Through AuAg Precious Green, the investor gains access to a commodity fund that aims to invest in mining companies extracting metals essential for the green transition, combining this with investments in green tech companies. AuAg Precious Green invests in copper through shares in mining companies, coupled with green tech sector companies and precious metals, focusing on gold.
AuAg Essential Metals
Through AuAg Essential Metals, the investor gets exposure to a commodity fund focused on metals needed in a high-tech and green future. The fund provides exposure to a wide metal portfolio, both industrial and new tech metals, and consists of 25 equal-weight holdings.
Benefits of investing in copper
There are several benefits to investing in copper, whether it be copper funds or stocks. Making an investment in copper:
- provides exposure to a commodity, which brings diversification to your portfolio
- offers an opportunity to profit from the transition to a greener world, where the demand for copper is expected to increase as we move towards a more electrified society
- creates a chance to improve conditions for both fellow humans and future generations.
FAQs
Like any other commodity, copper can be a valuable component of a diversified investment portfolio. It has several attributes that make it attractive to investors. Copper is a key material in various industries including construction, electronics, and transportation. Demand for copper tends to increase as economies grow and infrastructure needs expand, especially with the growing emphasis on green technologies that require significant amounts of copper, such as electric vehicles and renewable energy systems.
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