Not Gold, Not Silver: Copper Conquering the Investment World | ETF Trends

A deluge of investor capital is piling into metals, and it’s not necessarily those of the precious variety. Industrial metals such as copper are rallying too, feeding into strength for ETFs like the Global X Copper Miners ETF (COPX).

The latest rally comes as market uncertainty is starting to dissipate. With positivity surrounding a vaccine and a forthcoming Joe Biden presidency, the major market movers the past couple of months have played out, leaving a stimulus package as the primary remaining market catalyst.

“The two big unknowns have resolved themselves, and all we have now is a massive pump of money coming into the economy,” said Darius Tabatabai, a portfolio manager at metals trading firm Arion Investment Management, in a Wall Street Journal article.

COPX seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Global Copper Miners Total Return Index, which is designed to measure broad-based equity market performance of global companies involved in the copper mining industry.

COPX gives investors:

  • Targeted Exposure: COPX is a targeted play on copper mining.
  • ETF Efficiency: In a single trade, COPX delivers efficient access to a basket of companies involved in the mining of copper.

How is COPX performing right now? The fund is up over 40% YTD according to Morningstar performance numbers.

In the past six months alone, the fund’s net asset value has risen over 70%.

COPX Chart

Investors Pile Into Industrial Metals

Per the Wall Street Journal article, “Investors are piling into wagers on industrial metals like copper and nickel, betting that coronavirus vaccines and stimulus programs will drive a boom in manufacturing activity as part of a global economic resurgence.”

“Prices for copper have risen to their highest level in almost eight years. Iron ore, the main ingredient of steel, is one of the best-performing assets in 2020,” the article added further. “Other raw materials, such as aluminum and zinc, have added roughly 15% since the end of September and 40% or more since mid-May. And shares of metals producers, including Freeport-McMoRan Inc. and Century Aluminum Co., are on a tear, climbing alongside other stocks closely tied to economic growth.”

As opposed to precious metals like gold, which serve primarily as a store of value, industrial metals actually have utility. Metals like copper are used in real estate construction, automobiles and other manufactured goods.

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