The New York Mercantile Exchange’s copper futures (HG) are exchange-traded contracts (NYMEX). Copper, after iron and aluminum, is the world’s third most extensively used metal, and is mostly utilized in construction and industrial machinery manufacturing. While the cyclical nature of these key businesses provides plenty of trading opportunities, copper futures are also susceptible to political developments, particularly in nations where copper mining is a government-controlled enterprise.
What does buying a copper future mean?
Copper futures as a form of insurance In most cases, a copper futures contract equals 25,000 pounds of copper. Each contract is a solid commitment to deliver or receive a certain quantity and quality of metal. The delivery date is specified for a specific month, and the price is set at the time the commitment is made.
Pros of Investing In Copper
- Copper is a widely traded commodity, and investors can acquire direct or indirect exposure to the metal through a variety of means, including physical copper, copper mining companies, ETFs, and broad basket commodity mutual funds.
- Copper investments are a potential hedge against inflation or other broad economic issues because it is a widely utilized industrial metal with increasing demand during economic boom.
Cons of Investing In Copper
- Copper’s economic sensitivity: As an industrial metal, demand for copper can plummet during times of economic uncertainty.
- Limited exposure: Investing in mutual funds or exchange-traded funds (ETFs) may only provide limited exposure to copper as part of a broader portfolio of other holdings. Some ETFs may also be leveraged and involve derivatives.
- Other fees: Other costs such as storage, insurance, and so on may be incurred as a result of purchasing the actual metal.
- Market risk: Copper’s price, like that of other commodities, can fluctuate dramatically in the short term. Copper futures contracts trading might result in losses that exceed the amount deposited with a broker. Copper mining is both contentious and costly, posing additional risks for copper mining stocks.
How do you go about purchasing copper futures?
You’ll need to open an account with a commodities futures broker to buy copper or any other sort of futures. In the same way that stockbrokers register with the Financial Industry Regulatory Authority, these brokers register with the Commodity Futures Trading Commission and the National Futures Association. You can make trades by either phoning a live broker or utilizing broker-supplied software on your computer. The use of live brokers to place deals is still prevalent in the futures market.
What is the trading method for copper futures?
Copper futures contracts are traded electronically through Schwab nearly 24 hours a day, six days a week, and are offered by NYMEX on the Globex trading platform. Aside from copper futures, Schwab offers COMEX-listed gold futures contracts (GC) and NYMEX-listed silver futures contracts (SI) for trading nearly 24 hours a day, six days a week. To trade copper futures, you’ll need a futures account that has been approved.
Will copper become a valuable commodity?
Copper, a reddish-orange metal, is not regarded as a valuable metal. Copper is one of the most commonly utilized metals in the electrical industry, with building construction being the single greatest market for it. It is malleable, ductile, and a good electrical and thermal conductor. Copper has been mined for 5,000 years, and there was even a period known as the Copper Age between the Neolithic and Bronze Ages. Copper is important in plumbing and in paint used on the bottoms of ships to prevent vegetation from adhering themselves because it does not rust and almost does not corrode. It’s very common in high-end housing. Copper pipe discovered in ancient Egypt is still in good working order today. Cookware and analytical chemistry both use it. It’s impossible to think of an industry that hasn’t benefited from the use of copper.
Is a dollar worth of copper?
Copper prices on the COMEX have been tracked on a daily basis since 1971. The price per pound given is in US Dollars. Copper is now priced at $4.70 per pound as of March 25, 2022.
What is the all-time high copper price?
Looking back over the last two decades, the copper price has been on a roller coaster ride.
From a low of US$0.73 in early June 2001 to a peak of US$3.91 in April 2008, the copper price tracked global economic growth. Of course, the global economic crisis of 2008 quickly resulted in a copper price drop, with the metal reaching a low of US$1.29 by the end of the year.
Copper prices reached a fresh high of US$4.58 at the start of 2011 as the global economy began to revive. However, this high was short-lived, as the copper price began a five-year decline, bottoming out in early 2016 at roughly US$1.95 per pound.
Copper prices remained very stable during the next four years, fluctuating between US$2.50 and US$3.
Despite the economic recession, the impact of the coronavirus pandemic on mine supply and refined copper pushed prices upward in 2020. Copper prices rose from a low of US$2.17 in March to US$3.52 at the end of the year.
Copper prices continued to rise in 2021, reaching an all-time high due to economic rebound hopes and supply bottlenecks. So, what was the highest copper price ever?
Is copper a good 2021 investment?
Copper had a fantastic year in 2021. Following a stomach-churning 2020, the red metal rebounded dramatically in 2021, reaching an all-time high of $10,512 per metric ton on May 9, 2021 a 130 percent rise over the epidemic lows of March 2020.
Is copper a good 2022 investment?
Several bank experts, including Goldman Sachs, are optimistic about copper prices in 2022 and beyond.
Copper prices are expected to average $9,813 per tonne through 2022, according to Bank of America.
Copper demand is expected to remain high in the long run, according to analysts, beyond a two-to-three-year horizon.
Clean energy projects, industrial demand, and the race to mass-produce electric vehicles (EVs) all indicate that the world will want more copper in the future.