Copper prices have been on a tear, but some analysts are already calling a top for copper in 2021. Investors may want to extract the last bit of gains out of ETFs like the Global X Copper Miners ETF (COPX).
“Copper headlines have been everywhere lately, with the economic recovery and a move toward green technology boosting prices to 9.5-year highs,” a Kitco News report said. “But that excitement will start to fade, according to CRU director of base metals research and strategy Vanessa Davidson, who is projecting a peak in prices as soon as Q2.”
“Copper prices traded well above $9,000 a tonne at the end of February on positive vaccine news, which has encouraged expectations of a quick economic recovery, Davidson said on the sidelines of Prospectors & Developers Association of Canada (PDAC), which is virtual this year,” the report added.
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.
- Strong Performance: The fund is up almost 200% within the past 12 months and 26% thus far in 2021.
Will Copper Prices Fall in 2022?
Davidson expects copper prices to fall in 2022. He points to “a peak in copper prices in the second quarter of this year, and then we expect to see prices coming off a little bit.” The supply from the new products will start hitting the market from the second half of the year.”
“The general idea is that the prices do need to stay between $7,000 and $8,000 as a minimum because that’s where we think the long-term incentive price is for new capacity,” Davidson added. “We wouldn’t expect prices to drop back below $7,000 over the coming years to encourage enough projects to get off the ground.”
COPX’s one-year chart shows it may have some room left to run, as momentum has fallen below overbought levels when gauging the relative strength index (RSI). At a RSI reading of 60.88, this could be an opportunity for ETF investors to get in on a final rally should copper prices begin to fall.
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