Gold Alternative #5: Copper
OK, so it would take a lot of room to store your rainy-day fund in copper pennies under your mattress. But the great upside to copper is its affordability – and subsequent liquidity. Copper is flexible, cheap and a good conductor of electricity, so you can find it in everything, from sophisticated electronics to the pipes and wires in your home. Any industrial recovery simply can’t happen without copper, and unless we all go back to farming goats, the metal will remain in demand even during weak economic times. People need wires and pipes, even if they aren’t buying new flat-screen TVs or SUVs.
Think copper can’t be a gold mine just because it’s cheap? Think again. After a record low of $60 for copper futures in November 2001, futures on the metal hit a staggering $458 in February of this year – nearly eight times in returns.
Like other metals on this list, after the spike in February, copper has rolled back to essentially flat on the year. But a recent report from Maike Futures projected another strong rally for copper that could set new records in the months ahead.
How does one buy copper, beyond getting rolls of coins? Well, the iPath Copper Trust (NYSE:JJC) is a pure play on copper prices like the other trusts listed here. The fund is essentially flat year-to-date, as is copper itself in the same period. Another alternative is to get slightly more diversified through the PowerShares DB Base Metals ETF (NYSE:DBB), which is divided evenly between copper, aluminum and zinc. DBB also is flat so far this year, though up about 35% in the past 12 months. Along the same lines, there’s also the iShares Chile ETF (NYSE:ECH), which has huge copper exposure because 50% of Chile’s exports are copper. The ECH Chile ETF actually is about 8% in the red so far in 2011 based on its other holdings and troubles in the global economy. Of course, you have no shortage of copper miners, including blue chips Southern Copper (NYSE:SCCO), Freeport McMoRan (NYSE:FCX) and Teck Resources (NYSE:TCK), among others.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.