You need look no further than the penny in your pocket for a metal that is an attractive alternative to gold or silver for investors. Copper is experiencing some of the greatest global demand of any industrial metal due to two strong catalysts that should continue to drive up prices. First, increasingly popular hybrid automobiles use about two to three times as much copper as older nonhybrid cars. Second, emerging-market countries are in the midst of a decades-long infrastructure buildout that depends on copper for electrical wiring. Copper prices could easily rise by 50% over the next few years.
How to invest: Many precious metals dealers have started selling copper bullion in the form of bars or coins, much like gold. But storing copper bullion is not realistic for most people.
Better: Consider buying shares of iPath Dow Jones-UBS Copper Subindex Total Return ETN (JJC), a fund that buys futures contracts to track the world price of copper. You also can invest in copper-mining stocks, which are riskier but have the potential for faster appreciation.
Global X Copper Miners ETF (COPX) is an exchange-traded fund that holds shares in about 30 large copper-mining companies.
Freeport-McMoRan Copper & Gold (FCX) is the world’s largest publicly traded copper miner.
Volatility warning: Copper prices plunged 30% during a three-month period last year over fears that China, one of the world’s biggest industrial-metal purchasers, was facing a significant economic slowdown. Prices have since recovered about 25%.
Source: Frank Holmes, CEO and chief investment officer at US Global Investors, San Antonio. www.USFunds.com