Advice - Number 1: Multiply the assets!
The primary piece of advice concerning copper is not to concentrate on one single asset as the price movements can vary with the different companies concerned. To understand the copper trends it is recommended to refer to the overall charts that represent the high performers on this market.
This difference in growth between various companies exploiting copper can be understood when taking into account that the majority of copper mines also supply the markets with other commodities such as gold. This is also the reason why the price of copper often follows the gold price trend.
Advice - Number 2: Control the risks!
Although copper production can generate a lot of money, you should know that the production costs of this sector are extremely high. Due to this fact, it is necessary to exercise prudence concerning technical indicators linked to production such as for example those relative to a new mine as the profits will not be immediately forthcoming and in fact a fall in the price is more often noted at the beginning in this case.
Advice - Number 3: Do not use shares as indicators
Although it is tempting to imagine a link between the copper price and the share price of producing companies this does not exist. One can however note a slight rise in the price of copper as a commodity whereas the increase in share prices remains well below that of the trend.
In reality it is the copper price that will later generate a modification of the share price of companies in this sector. Traders anticipate that although prices are low there will be a future increase in company profits due to a higher purchase volume.
Advice - Number 4: Monitor demand!
As with a lot of commodities and other types of assets, the price of copper follows the logic of supply and demand. Therefore to speculate successfully and anticipate rising trends, you should monitor the available stocks and state of production as well as the potential demand from the international industrial sector.
Copper is primarily used as a production material, notably in the sectors of IT and technology. The consumer countries are generally highly industrialised so their financial health and growth forecasts are highly influential regarding copper.
Advice - Number 5: Study Chinese indicators!
China, as a strongly industrialised country, is one of the largest consumers of copper throughout the world with over 28% of world imports. Its copper consumption has not ceased to increase over recent years.
This particularity means that the financial and economic events of this emerging country play a crucial role in the copper price. The majority of investors that trade in this metal react rapidly to the slightest relevant information coming from this country.
The economic policy of China has a particular influence on the copper price, whether it be relative to a rise or fall, due to its high consumption of this commodity.