How to invest in copper? A beginner's guide to investing in copper

How to invest in copper

When we talk about investing in precious metals through the best trading platforms, investors usually think of gold and silver metals as they are the most famous and traded in the financial markets, especially among licensed trading companies in the Kingdom of Saudi Arabia. However, trading and investment experts believe that investing in copper metal It may be a suitable option in many cases to achieve investment goals.

About Copper in Financial Markets

Copper metal currently ranks third in the list of the most consumed industrial metals, due to its unique properties that include its ability to conduct heat and electricity, as this metal is mainly used in multiple industries such as the automotive industry, communications networks, and others.

Some analysts and experts in the financial markets consider the price of copper a key indicator used to estimate the health of the global economy, similar to the method of monitoring the demand for oil through the platforms of licensed oil trading companies in Saudi Arabia. For this reason, copper is an excellent choice for investors wishing to trade in the precious metals market through trading platforms. Online where it can be an exciting opportunity to make profits.

Ways to invest in copper

Copper investment is one of the investment methods that have been practiced for a long period of time by owning the ore of the copper metal, holding it and then selling it when its price rises. However, this method was characterized by some complications such as storage and shipping problems, but the advent of online trading has radically transformed the economic landscape. , as investors can now trade in the price of copper without having to actually own it.

There are many ways through which copper can be traded and invested through the best global trading platforms, and below we offer you the most important ways to invest in copper 2023:

Investing in copper stocks

Investing in the shares of copper production companies through the best trading platforms in the world represents one of the indirect means of investing in copper. When copper prices rise, these companies benefit from this rise, which leads to an increase in their share prices. This enables the investor to make profits. However, the investor must do careful research and study the companies before deciding to buy their shares.

Copper ETFs

Exchange-traded investment funds represent one of the indirect means of investing in copper metal, as ETF funds are known as funds listed on global stock exchanges, and often aim to track the price movement of the underlying financial assets in the portfolio such as stocks, bonds, commodities, and others.

These investment funds give investors the opportunity to invest in modest amounts, and are distinguished by providing diversification in the portfolio to reduce potential risks, and they can also be traded and invested in the same way as it is done in stocks.

Copper futures

Futures contracts are a type of financial derivative instruments that provide the possibility of concluding a binding legal agreement between two parties to exchange specific commodity materials or financial assets at a future date at a predetermined price. Investors can invest in copper futures contracts to participate in speculation and trade on copper prices without having to own it. Actually on the condition that they close out their positions before the contract expires.

These contracts are traded on international exchanges such as the London Metal Exchange, the Multi Commodity Exchange, the Shanghai Futures Exchange and the Tokyo Commodity Exchange, including the Commodity Exchange that is part of the Chicago Mercantile Exchange.

It is worth noting that trading copper futures contracts suffers from one drawback, which is that investors are required to buy or sell large volumes of contracts, and the investor cannot trade small parts of the contract.

Factors affecting the price of copper

investing in copper

The price of copper is affected by a variety of factors, including:

1. Supply and demand: Supply and demand quantities play a major role in determining the price of copper. When the demand for copper increases among industrial companies and infrastructure sectors such as the construction and automobile industries, the price of copper rises. On the other hand, if productivity and supply increase, this can lead to a decline. the prices.

2. The global economic situation: Copper is an indicator of global economic growth, as the demand for copper increases during periods when global economies witness strong growth, for example: the rise in construction and spending on infrastructure enhances the demand for copper.

3. Political Events: The impact of political and geopolitical events on supplies and potential risks to production can significantly affect the price of copper.

4. Currency Market Fluctuations: Since copper is priced in US dollars, currency exchange market volatility can affect the price of copper.

5. Production and extraction technology: Copper extraction and production techniques play a role in the cost of production, which in turn affects the price of copper. A higher cost of production can lead to a higher price of copper.

6. Weather fluctuations: Weather conditions affect mining and transportation operations. Weather phenomena such as storms and floods can disrupt copper supplies and lead to higher prices.

Steps to trading on the copper exchange

Trading financial assets is made easy thanks to licensed financial brokers that offer multiple services, including trading of precious metals such as copper. Here are the basic steps to follow:

  • Searching for a suitable financial broker: Search for a licensed and reliable financial brokerage company, then check the licenses issued to it and see the evaluations of previous investors.

  • Opening a trading account: Open a real trading account through the financial platform of the chosen broker, where you must fill in the required data and follow the specific procedures to activate the account.

  • Capital Deposit: Deposit the capital you intend to allocate for trading and specify the amount you wish to invest.

  • Selection of financial assets: After depositing the capital, you can search for the financial asset you wish to trade including copper.

  • Start trading: Start executing buying and selling deals based on your strategy and trading plan. You should follow the prices and market analyzes well to make the appropriate decisions.

By constantly learning and using the tools and resources available to you, you can develop your trading skills and achieve your investment goals.

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