How To: Ride the Copper Boom while Protecting Your Downside.

I have been seeing articles about Copper shortages but hadn't really paid much attention to them. My interest was sparked looking at one of the latest TradingView Editors Picks which was a chart of Copper pricing and how it has been in a nice steady uptrend for the last year.

What's driving the demand in Copper and why do I think it might continue upwards - well apparently copper is critical for solar panels, wind turbines, electric vehicles and battery storage - and there has been a massive surge in demand, but the miners haven't been expanding rapidly enough or finding enough new sites to keep up with the volume.

I thought I would go looking for a Copper Mining ETF so I can invest in the industry overall as opposed to individual companies and liked the look of COPX which is now up close to 300% since March last year. The advantage of the ETF is I want to hold it for a longer period than an individual company so I am looking for gains - but with less volatility. Makes it more suitable for some of my long term holdings. With COPX I get a basket of miners across Canada, the United Kingdom, Hong Kong, United States, India, Australia, Mexico, Poland, Sweden, and Japan so in theory might reduce some of my risk as they will be able to supply companies globally without so much political interference or local issues out of their control such as natural disasters. That's the theory anyway.

The chart looks nice and steady so I want to stay in the trade as long as possible - potentially years, until enough new mines have opened - or perhaps another battery mineral replaces copper.

So once I have picked my entry I will look to set a trailing stop loss to protect any reversals - but at the same time I want it wide enough to keep me in while there is any volatility. I don't want to get stop hunted along the way. Based on the last 12 months of price volatility a stop around 16% or so looks like it will meet this criteria. Things can of course change. If some new comes out about replacing copper as a key ingredient in these devices I may tighten my trail and look to exit earlier, but for now it seems about right.

COPX could be worth a look - OR - you could look to invest in some of the individual miners that make up the ETF and try and outperform it.

Have a look at either of these two ETF sites for more information with a breakdown of what's in the ETF. ETFs are fun :)

www.etf.com/COPX

etfdb.com/etf/COPX/

Comment:

CPER is another option, but I feel COPX has the edge.