Investing in copper is becoming a very popular trend for those looking to diversify into new metals other than precious metals.

There are a multitude of reasons one might chose to begin investing in copper, so we'll break down the pros, cons, and the methods for buying copper as an investment.

Why investing in copper is a good idea

Investors are building positions in copper as an investment for the following reasons:

1. Limited Supply – The amount of copper available at inexpensive prices continues to dwindle. Miners that found copper easy to mine are finding it harder to produce more and more of it to keep up with demand. It is expected that at some point in the next 25 years, copper will have been exhausted, and future mining potential will be all but impossible. You can read more about Peak Copper at Wikipedia.
2. Emerging Market Growth – Copper's utility is maximized in infrastructural investments in pipelines, electrical wiring, and other much needed infrastructure in the developing world. The emerging markets are the largest source of copper demand, with as much as 22% of global copper demand coming from China, a major infrastructure investor.
3. Safety – As with any metal, copper has an intrinsic value derived from its utility and limited quantity. Copper will always have some value, a trait that makes it a great investment vehicle for investors who want certainty in that their investment will always have value.
   

How to Invest in Copper

Investors have a few choices as to how they can buy copper as an investment. Here are the most common investment vehicles:

Copper ETFs – Copper exchange-traded funds allow ivnestors to buy and sell copper as if it were a share of stock on a stock exchange. In total, there are now three copper exchange-traded funds, but only one is active enough to warrant an investment.

iPath Dow Jones-UBS Copper Subindex Total Return ETN (JJC) – An ETN designed to track the change in copper prices over the long-term. This ETN is the most popular, with more than $100 million in assets and average volume of roughly 50,000 shares per day.

Copper bullion – Investors can also buy copper in physical form by going to a site like Ebay, where individuals and coin companies sell copper bullion bars and rounds. Far more expensive than spot price, this is one of the worst methods to buy copper in terms of price to value—copper is incredibly inexpensive as a base metal, meaning that much of the price you pay for bullion bars or coins of copper is due to the manufacturing and minting processes used to make the coins themselves. Regardless, this is one of the best ways to buy copper in pure form, and investors may just find copper bullion to be a very cool, if possibly numismatic, investment opportunity.

US Pennies – US pennies have become more popular as a proxy to buy copper inexpensively. Pre-1982 pennies are almost entirely copper, and have a copper value greater than the face 1 cent value. As it stands, however, it is illegal to melt down US coinage to obtain the metal value in the coin itself. However, many of those who are stockpiling pennies are thinking that the future for copper melting may be better, and new laws may override long standing legal concerns over melting down pennies as a source of raw copper. If the United States does get rid of the penny, as some are saying might happen in the not so distant future, it may be legal to melt down US coinage for its metal weight. The debate is so popular, Wikipedia has a page titled "Penny debate in the United States."

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