The economic reports seem like they’re coming straight from Pollyanna these days – factory orders are up, housing is in recovery mode and consumer confidence is higher. Copper exchange traded funds (ETFs) seem to be rejoicing the most.
Many factors that support copper are in favor of taking the metal’s price higher. Matt Whitaker and Andrea Hotter for The Wall Street Journal report that on the the COMEX division of the New York Mercantile Exchange, copper settled at its highest point since July 2008. [Why the Copper ETF Rally Deserves Your Attention.]
Reasons supporting this include:
- Investors have more risk appetite than they did at the end of last year.
- Globally, Greece has a more stable outlook, and China’s growth prospects look steady. The financial crisis in Greece, however, hasn’t been fully resolved, so be aware of this.
- The industrial metal has hit key technical levels in recent days, triggering pre-placed buy orders that added to the upward momentum. [How Metals ETFs Have Changed Investing.]
- Global copper demand this year is expected to soar, led by a strengthening China.
- The U.S. dollar is weak, lending support to copper prices because it becomes cheaper for overseas buyers.
Firat Kayakiran for BusinessWeek report that demand for the medium term is actually rising faster than supply. As countries continue to emerge from the recession, expect prices to rise along with the demand. [3 ETF Trends Being Spotted Now.]
For more stories about copper, visit our copper category.
- First Trust ISE Global Copper (NASDAQ: CU): Holds mining stocks and was just launched this month; read more about equity commodity ETFs here
- iPath DJ-UBS AIG Copper ETN (NYSEArca: JJC): Exchange traded notes (ETNs) differ from ETFs; read more here
- PowerShares DB Base Metals (NYSEArca: DBB): 33% copper futures contracts (the other two-thirds are evenly split between aluminum and zinc)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.