Is February the Best Month to Buy Copper?

Is February the Best Month to Buy Copper?

  • Copper is a popular commodity with a reasonable degree of volatility
  • The price of copper is at a low point just now, due to economic sluggishness
  • A good investment for 2020 for those who believe the global economy will improve

You may see copper referred to as the best commodity to understand the entire global economy. This is a heavily-traded commodity that can add a high degree of diversity to your investment strategy, Take a look at why now might be the time to get involved.

Why Is Copper a Valuable Metal?

Copper is a hugely versatile metal that is used for many different things. It is a soft and malleable type of material that has an excellent level of thermal and electrical conductivity.

This means that it is used to improve the infrastructure of cities. Therefore, the value of copper is seen as being a good indicator of economic growth. As a country develops it will typically increase its demand for copper as more projects get underway.

Copper is highly useful but the price of this commodity isn’t particularly high. This is because it isn’t especially scarce. In fact, it is estimated by some sources that the planet will never run out of copper. It is recyclable and completely sustainable. So even if there is no more to be mined at some point, we can still get hold of if from elsewhere.

However, it can become scarce at times due to high demand or factors such as strikes in the mines where it is obtained. These issues lead to volatility in the market. For instance, Chile is the world’s biggest producer- 5.6 metric tons in 2019 – but they often suffer from strikes that halt production.

When Should You Invest in Copper?

Buying copper is generally considered to be a good investment when you think that the global economy on the way up. The fact that it is used in so many industries means that an economic boom almost certainly leads to copper becoming more sought-after and more valuable.

It is a good way of diversifying a portfolio too. This is a commodity that is related to economic growth but that doesn’t have a direct link to many other types of investment.

Like any other type of commodity, you are looking for a low price together with prospects of an economic upswing. We can now take a look at the current price and some predictions for the future

The Current Price Situation

At the time of writing, copper is priced at about $2.60. This is low when compared to historical figures. It was close to $3 a year ago but has suffered a fall due to the economic slowdown and, latterly, the coronavirus.

Historically, this metal reached over $4 .50 in 2010, which was its highest-ever price and followed on from a price crash. While it is fairly volatile, the price has always remained between $2 and $4 for about the last decade.

A Look to the Future

The following factors make us think that copper’s value could be due to rise.

  • It has reached a low point when compared to historic prices
  • Analysts are now more optimistic than previously over the global economy and growth rates
  • Demand is growing in rapidly developing countries
  • The copper to gold price ratio is very low

This final point is very important. Investors tend to turn gold in times of economic uncertainty. Meanwhile, copper falls when growth is slow. So, the current ratio shows that we have gone through some troubled times.

If you believe that the global economy outlook is positive then copper is a smart investment. In that case, right now is a good moment to buy this commodity.

By Robert Bell
Having worked for years in the UK banking industry, I began writing and reporting financial markets after migrating abroad to Bolivia. My interests include learning new ways to make money and learning to speak Spanish.

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.