Copper prices keep trending higher as President Trump continues to make moves on the tariffs chessboard. If the bullish momentum can sustain, investors should look at copper-focused ETFs.
On the trading floor, the volatility of copper prices has opened the door for arbitrage opportunities. Year to date, copper prices have risen more than 16%, as the threat of tariffs could impact copper significantly. That assumes the market hasn’t already priced in those ramifications.
A Reuters report explained the widening gap between the spot premium of copper at the Chicago Mercantile Exchange (CME) versus the London Metal Exchange (LME). The chart below depicts that disparity. It also shows the rising copper stocks in relation to this price comparison.
“The arbitrage between the CME and the London Metal Exchange (LME) contracts has blown wider in recent days, with the CME premium exceeding $1,000 per metric ton earlier this week,” Reuters reported.
Greater Degree of Access to Commodities
Outside of a trading floor, the advent of ETFs has allowed all investors, both institutional and retail, a greater degree of access to commodities. In the case of metals, Sprott is a leading ETF provider in this investment class. The issuer offers a few options for copper, or more specifically, copper miners.
One broad-based option to consider is the Sprott Copper Miners ETF (COPP ). The fund specifically tracks the Nasdaq Sprott Copper Miners Index (NSCOPP). The index includes producers, developers, and explorers that support the copper mining industry. For diversification, COPP provides blanket exposure by focusing on large-, mid-, and small-cap mining companies.
Higher Growth Potential
Small-cap and microcap companies can offer investors higher potential for growth if they’re not averse to a higher level of volatility. Midcap companies can offer a mix of large-cap characteristics with a tinge of growth from small-cap equities. Investors interested in this mix should look at 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 microcap companies entrenched in copper-mining-related businesses, offering exposure to equities with high growth potential.
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): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
