Is Copper a Good Investment?
Investor Blog
Copper is in everything. It conducts electricity well which makes it a great metal for wiring used in technology. So we need it as more technology emerges, but does that mean copper is a good investment? Let’s look into it.
If you’re interested in investing in junior mining, with an eye toward investing in copper, this post is for you. There are many risk factors associated with junior mining, especially copper. However, the risks can be mitigated by doing your research and having a plan.
The first step is to understand the differences between junior mining companies and senior mining companies. There are two very different business models, so the way to evaluate their potential success is completely different.
What is the difference between Junior Mining vs Senior mining?
The term “junior sector” is used to describe exploration stocks that have yet to prove up an economic discovery of their resources. Their assets are often in the early stage of exploration, with relatively few drill holes completed, and huge amounts of budget left, to prove up the value of their properties.
By contrast, senior mining stocks have proven and developed mines, with known resources and reserves, generally selling in large quantity to a few strategic customers.
Junior mines are often speculative investments where the shares can move wildly over short periods of time. Many investors avoid junior mining stocks, as they can be highly volatile.
There are also significant differences in the way that junior vs senior stocks are financed.
Copper experts, analysts and researchers are all bullish on prices, but there are some key differences about how they see the market.
With prices rising as much as 75% over the past 18 months, some analysts see more upside. “Copper demand is mega-cyclical,” says Steve Halcrow, the director of research with investment firm Graham Capital Management. “And right now we’re in a very strong upcycle.”
Other experts say prices will face more headwinds in coming years amid increasing supply. According to a recent research note from Goldman Sachs, copper production capacity is expected to increase by around 11% in the next several years, which may lead to a supply surplus. As a result, prices are likely to “decline significantly as early as 2018” from current highs, Goldman says.
Copper’s demand, he says, is driven by a handful of mega-investments in infrastructure. These include China’s planned $1 trillion infrastructure development program, as well as a massive infrastructure build-out across India and South East Asia.
“There are a lot of projects going on that require copper,” Halcrow says. “We think it’s a good time to buy.”
The junior mining industry has always been one of the most exciting industries in the world of investing as it is one of the least regulated and most likely to provide investors with a high-reward scenario.
The time to invest in companies exploring for new Copper mines is now.
Our friends at Resource Investor have noticed this fact as well and have created a story that compares the demand for copper with the production of mines.
Full article: https://www.resourceinvestor.com/news/2017/08/What-s-behind-the-Copper-Surge.
If you have any questions about Zimtu’s Copper equity holdings – Join us on June 2, 2021 at 10am for our Question Period, and ask company CEO’s & representatives anything you wish!