How to Invest in Copper

Coppergeek.com - Your guide to investing in copperCoppergeek.com is your guide to investing in copper by saving copper pennies.  Our goal is to enlighten the masses that our governments are debasing our money through inflation, and the cheapest way to protect yourself is to save your coins for their melt value.

Copper is a ‘base metal’ – as in, not a precious metal like gold, silver, platinum or palladium.  It hasn’t received the press that the noble metals have, but it should!

The reddish metallic element is one of the most useful substances on Earth.  Not only is it an incredibly efficient conductor of electricity and heat, but it is strong and corrosion resistant.  It is used in a wide variety of every day appliances such as wiring, plumbing, roofing, electronics, motors, mobile phones, coinage and more.

So, how does one get involved in investing in copper?  Well for starters, you probably already have a lot laying around your house and in your couch cushions!

United States pennies, until 1982 were made of 95% pure copper.  In the late 1970s and early 1980s, inflation was rampant – the prices gold and silver and other commodities like copper were peaking.  The penny was costing more money to mint than it was worth.  The US mint switched to using 97.5% zinc in the pennies.

This is similar to what happened with the silver in US coins in the 1960s.  The price of silver made the coins’ silver content worth more than the face value of the coins, so the US mint in 1965 took the silver out of the coinage.  People quickly began saving all the silver dimes, quarters and half dollars they could find still circulating.  Today those coins are worth 30 times their face value and rising dramatically!

1972 copper pennyThe pre-1982 copper pennies are still in circulation, and because we are now in a period of heavy inflation again, the price of copper has soared.  Every penny in circulation that was made before 1982 is now worth 3 cents in copper melt value.   There will come a day, perhaps decades away, perhaps sooner, that today’s coins like the US copper penny will be worth 30 times face value.  It is currently not legal to melt US copper pennies for their metal content, however most penny hoarders believe these laws will eventually be lifted, just as they were for silver coins that were taken out of circulation.  You have the opportunity today to stash away as many of these copper pennies as you can at face value.  This is like having a time machine and going back to the early 1960s and telling your family to save all the silver coins they could get their hands on because they will increase dramatically in value.

So, what are some of the reasons you should be saving and investing in copper?  Well, thanks to the huge influx in industrial and economic growth in India and China, the global demand for copper is at an all-time high and shows no signs of slowing.   In the last 15 years, the total global production of refined copper has grown over 4500%, while the consumption of copper has increased by over 6800% !   For the last decade, copper consumption has outpaced copper refining production by a large margin.  As a result, the global stockpiles of copper metal have shrunk to all-time lows, and the price of copper has skyrocketed to all-time highs.

As emerging markets in Asia, Europe and South America catch up to copper consumption rates of North America, just imagine what the prices of the dwindling copper supply will be.   Many investment experts believe investing in copper is the best way to play China’s growth, which will continue strongly for years to come.  The commodities that do well are the ones China doesn’t have a lockdown on production, and copper fits that bill perfectly.  Barclays reports that China’s domestic copper production of 6.5 million tons will not meet their demand – falling short by over 2 million tons this year.  Expect this trend to continue.  The number one usage for copper in China is the electrical grid – that is a boatload of copper they will need to import in the years to come, driving up demand and price.

Some investors will look for alternative ways to invest in copper.  There are a few ETF Copper Index funds available.  I advise my readers to steer clear of any ‘paper’ assets such as these ETFs when considering investing in metals.   The physical metal will always trump paper assets at the end of the day.