Geopolitical and economical forces will weigh heavily on prices for all commodities. In the case of copper, China’s consumption will play a pivotal role in which direction prices may take.
As reported in Reuters, investors who were looking for a repeat performance of copper’s spike following the election of Donald Trump in 2016 have not seen it materialize eight years later. That could be because a lot of questions remain on how the incoming presidential administration will handle its relationship with the second largest economy.
Moreover, copper demand from China will still be dependent on whether its government can do enough to reinvigorate economic growth. Calls for additional stimulus continue to echo louder if the country continues to falter economically following a real estate development crisis a few years ago.
Still, the bullish outlook on copper remains for fund managers in the long-term horizon. However, it has been tempered as of late. Rather than witness a post-election spike, Reuters noted that “the market focus was as much on China as it was on the U.S. as the other big event last week was the meeting of China’s National Peoples Congress (NPC) Standing Committee.”
Also, as mentioned, bullishness surrounding China will depend on the implementation of more stimulus measures. China has already taken strides to stem the economic tide, but in the eyes of the capital markets, more is necessary.
“The resulting $1.4 trillion package to ease local government’s ‘hidden debt’ burden disappointed metal bulls looking for something much stronger from China’s cabinet,” Reuters added.
Still, given all these push-pull factors, the growth aspect of copper can’t be denied. On that note, investors have options to get exposure to the industrial metal, with Sprott offering two.
Small-Cap and Broad Exposure
Investors harboring a risk-on sentiment who are not averse to the volatility of small caps can choose the Sprott Junior Copper Miners ETF (COPJ). The fund aims to track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses, offering exposure to equities with high growth potential.
Investors who are not looking for the nuances exposure of small-cap markets but want generalized exposure to complement an existing portfolio can opt for the Sprott Copper Miners ETF (COPP). That fund tracks the Nasdaq Sprott Copper Miners Index (NSCOPP). This index tracks the performance of a selection of global securities in the industry. That includes producers, developers, and explorers that support the industry. Overall, COPP provides blanket exposure to this mining industry, focusing on large-, mid-, and small-cap mining companies.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
Past performance is no guarantee of future results. One cannot invest directly in an index. For the latest standardized performance and important risk disclosures regarding Sprott investment products, including each fund’s prospectus, which should be read carefully before investing, please review each product’s webpage by clicking on the corresponding ticker:
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
Physical Bullion: PHYS, PSLV, CEF and SPPP
