Copper prices continue to exhibit upside. And that is providing investors with opportunities for exposure to the Sprott Copper Miners ETF (COPP). That fund will include the physical metal as part of its holdings.
COPP makes for an intriguing play. That’s because it’s the only ETF in the current market that provides pure-play exposure to the element. When you combine that with its current focus of miners, it makes for an all-encompassing fund that can truly capitalize on the growth potential the metal can bring. As opposed to building a commodities portfolio of individual stocks that can capture the upside in mining, consider COPP.
Speaking of its growth potential, it’s already showing itself in supply bottlenecks. That’s due to global electrification continuing to spur demand. This demand could eventually outstrip supply according to various market experts.
In the short-term horizon, a potential catalyst for rising prices for the element is tariffs. As noted in a report by ING, tariffs on steel and aluminum could also translate to tariffs on copper. With that anticipation, demand for the metal is rising, which has been evident in its current rally. Prices are up over 20% for the year, largely retracing back to its pre-April levels.
The report further mentioned that getting the element into the U.S. prior to tariffs is tightening supply chains in other parts of the globe. As already noted, increased demand amid tighter supply creates the perfect backdrop for higher prices.
A harbinger for this potential upside is the disparity in prices for the metal in the U.S. versus London. ING reported that this price differential was already apparent in February. The April tariff sell-off quickly stifled the element’s rally, but it has been recovering since.
ING also made mention of the U.S. being heavily dependent on imports of this metal. President Trump is looking to wean the country off dependence from other nations, just as with other commodities. But replacing copper imports will be a challenge at least in the short-term time frame. In the meantime, the U.S. can continue investing in its mining operations, which may be a boon for COPP.
Adding Physical Copper to the Mix
As mentioned, COPP diversifies its focus to all market-cap sizes. It seeks to capture the stability of large-caps and growth characteristics of small-caps. Those who solely want small-cap exposure can look at the Sprott Junior Copper Miners ETF (COPJ).
Per COPP’s basic description, the fund tracks the Nasdaq Sprott Copper Miners Index (NSCOPP). That index includes producers, developers, and explorers that support the copper mining industry. As mentioned in its announcement, the index will also include a 4.75% allocation to physical copper with the addition of the Sprott Physical Copper Trust. This pure copper exposure will be available when the index performs its semiannual rebalance on June 23.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): GBUG, SLVR, SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
