Copper Investment Guide 2022

There is no doubt that when people think about trading or investing in minerals, their minds will shift primarily to investing in gold and silver before even thinking about investing in copper, the red metal.

Because copper does not share the same status or gravity as brilliant precious metals, it plays a major role in our lives and is the third most consumed industrial metal in the world.

In this article, we will present to you the Copper Investment Guide for 2022.

What is copper?

^{Copper is one of the most incredibly versatile base metals, it is very important in the modern world and its continuous development, and it is used heavily in the construction and manufacturing industries thanks to its excellent heat and electricity conductivity properties. Copper is the best non-precious metal conductor of electricity, which is the main reason for its popularity in these industries.}

Pipes and copper wires pass through our homes, and at least any small car contains about 20 kg of copper, which helps it to operate, and global telecommunications networks rely heavily on copper metal.

Given its usefulness in construction and manufacturing, the price of copper has a positive relationship with economic growth and is generally seen as a reliable indicator of the health of the world economy.

What factors affect copper prices?

As with any freely exchanged commodity in the world, the price of copper is determined by the balance of global supply and demand, as different factors can affect supply and demand levels, and here are some of these factors:

1. Health of the economy

Copper performance is positively linked to economic growth and, therefore, copper is seen as a measure of global economic health, with copper dubbed Doctor Copper. “”

During times of economic boom, many countries are building and industries are booming, increasing the demand for copper. On the other hand, when the global economy slows, these activities are slowing and demand for copper is falling.

2. Natural disasters

Owing to a large proportion of the world’s copper production in only two countries, a natural disaster in either region could lead to imbalances in supply, which could directly affect copper prices.

3. Alternatives

Although copper has better access to heat and electricity compared to other metals, and in addition to its super softer (i.e. its ability to form and pull easily), there are alternatives to metal which, although of little importance, begin to appear more attractive when copper prices start to rise.

Where the availability of alternative metals can lead.. including aluminum, to decrease the quantity of demand for the copper metal. Which in turn leads to lower demand when the price of copper becomes too high.

How to invest in copper?

It is possible to invest in copper by buying the material commodity. But in this way, you may have some logistical problems such as storage difficulty, but there are a variety of ways you can invest in the copper market.

Here are these ways with enough explanation for each:

1. Copper stocks

One way to invest in copper is by indirectly buying shares for a company working in this field. Whether through excavation, extraction, or copper development.

If copper prices rise, the companies concerned will undoubtedly benefit from this rise. This increases their equity prices. However… When it comes to investing in a company… Then it’s about more than just wanting to know where you work. It must look deeply at its fundamentals. There is also no guarantee that all companies operating in the copper industry can make any potential gains in the price of copper.

2. Copper ETFs

ETFs are another way to invest indirectly in copper.

ETF is a publicly listed fund designed to track the price movement of a financial asset or underlying financial assets. Each investment fund differs in the way it follows the price of a financial asset. When it comes to goods… The Investment Fund can invest heavily in material goods. Or may own shares in companies operating in related industries.. Or you might trade derivative tools or do a combination of these things together.

3- Copper futures contracts

A copper futures contract is a legally binding agreement between two parties to undertake the exchange of a commodity at a specified date in the future at a predetermined price.

Where copper futures contracts are exchanged on the London Metal Exchange.. on the Multi Commodity Exchange, within the Shanghai Futures Exchange, and on the Tokyo Commodity Exchange.. and also on the Commodity Exchange, which is a member of the Chicago Mercantile Exchange Group.

Investing in copper futures contracts allows traders to speculate on the price of copper without the need to own the physical commodity, provided that they close their positions before the contract expires.

4-Copper options contracts

A copper options contract gives the buyer the right, but not the obligation, to exchange a commodity at a predetermined price on or before a predetermined date.

5-Copper CFDs

Copper CFDs are a contract between two parties in which they agree to exchange the difference in the price of a commodity within the time the contract opens and closes.

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