CPER: New All-Time Highs In Copper And A Correction

seekingalpha06-04

Copper reaches record high, highlighting its growing importance in the global market.Copper futures have been on an upward trajectory since a significant correction in 2022.Upside target for copper is...

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href=https://seekingalpha.com/article/4697169-cper-new-all-time-highs-copper-correction><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Copper reaches record high, highlighting its growing importance in the global market.Copper futures have been on an upward trajectory since a significant correction in 2022.Upside target for copper is...</p>\n\n<a href=\"https://seekingalpha.com/article/4697169-cper-new-all-time-highs-copper-correction\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2237438978.USD","symbol_name":"Amundi Funds US Pioneer A2 (C) 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trajectory since a significant correction in 2022.Upside target for copper is over $6.80 per pound, with potential for significant gains in the long term.CPER is a copper ETF product that follows the metal's price.   mabus13 In a March 21, 2024, Seeking Alpha article on copper and the CPER ETF, I concluded: If copper is on a path that breaks out and challenges the 2022 record high, CPER could be a golden ETF to add to your portfolio.  After a significant correction from a high of $5.01 per pound in March 2022 to a low of $3.15 in July 2022, COMEX copper futures have been on an upward trajectory. Copper reached a new milestone this month, hitting a record high at just below $5.20 per pound on the nearby COMEX futures contract. This achievement underscores the growing importance of copper in the global market. While copper’s trend is higher and the red metal has significant upside potential, the risk of a correction increases with the price. Copper eclipses the March 2022 high Before 2005, copper futures on the CME’s COMEX division never traded above the December 1988 $1.6495 high.   Long-Term COMEX Copper Futures Chart (Barchart) As the monthly chart dating back to 1971 highlights, after copper broke out above the 1988 peak, it has made higher lows and higher highs. The last time copper was below $2 per pound was in January 2016. Copper has not traded under the $3 level since October 2020. Volatile copper futures reached a record $5.01 high in March 2022 before plunging over 37% to a $3.15 low four months later in July 2022. Since then, copper futures have made higher lows and higher highs, reaching a new record $5.1985 peak in May 2024. At the latest high, copper was 28.5% higher than the price on March 21, 2024. Higher highs on the horizon- Over $6.80 is the upside target Copper’s application in green energy initiatives caused Goldman Sachs analysts to call the nonferrous metal the “new oil.” In late 2023, Robert Friedland, Ivanhoe Mines founder and chairman, said $15,000 per ton of copper is needed to spur new mines. Copper has been in a bullish trend for nearly two decades, and a move to $15,000 per ton on the three-month London Metals Exchange forward contract would put the nearby COMEX futures price above $6.80 per pound, over 30.7% higher than the most recent high. The risk of a severe correction rose with the price Even the most aggressive bull markets rarely move in straight lines. The price explosion that took copper to its latest record peak ran out of bullish steam on May 22, and the price plunged.   Three-month COMEX Copper Futures Chart (Barchart) The three-month chart illustrates July COMEX copper futures rallied to $5.1990 on May 20. On May 22, the price dropped by 25.75 cents or over 5%. The correction has taken July copper futures below $4.60 per pound as the red metal searches for a bottom in early June. Technical support on the monthly chart is at $3.53 and $3.15 per pound. The odds favor another higher low for the nonferrous metal. Three alternatives for a direct copper investment A scale-down approach to buying copper during price corrections has been optimal for nearly two decades. The most direct routes are the CME’s copper futures and futures options and the London Metals Exchange forwards and options. The three alternatives for a direct investment are:   Copper ETF products: The U.S. Copper ETF (NYSEARCA:CPER) owns a portfolio of copper futures contracts. The Invesco DB Base Metals Fund ETF (DBB) holds copper, aluminum, and zinc futures and forwards. Aluminum and zinc tend to follow copper, the leader of the LME metals.  Copper mining ETF products: The iShares MSCI Global Metals & Mining Producers ETF (PICK) owns shares of BHP Group (BHP), Rio Tinto (RIO), Freeport McMoRan (FCX), Glencore (OTCPK:GLNCY), and other leading copper producing and refining companies that tend to move higher and lower with copper’s price.  Copper producer shares: The companies help by the PICK ETF, Southern Copper (SCCO), and others provide exposure to copper’s price.  While futures and forwards provide the most direct exposure to copper, the ETFs and mining shares are proxies that reflect the path of least resistance of copper’s price. Levels to watch in CPER- Copper is a bellwether commodity CPER’s top holdings include:   Top Holdings of the CPER ETF Product (Seeking Alpha) At $28.66 per share, CPER had $229.19 million in assets under management. CPER trades an average of 292,059 shares daily and charges a 1.04% management fee. CPER started trading in 2011. The ETF has done an excellent job reflecting the price action in the copper futures and forward markets.   Long-Term Chart of the CPER ETF (Barchart) The chart shows CPER rose to a record 2022 $30.12 per share high when copper futures reached $5.01 per pound. Four months later, CPER fell 36.55% to a $19.11 low. Most recently, copper’s new record high at nearly $5.20 per pound pushed CPER to an all-time $31.63 peak.  Copper ran out of upside steam, and picking bottoms in any market is impossible. However, increased demand from green energy initiatives, a $15,000 per ton requirement for significant new production, and a bullish trend for nearly two decades favor another higher low on the way to higher highs. I am a scale-down buyer of copper after the most recent correction. While it is challenging to pick lows because markets tend to fall to irrational, illogical, and unreasonable prices during corrections, the same holds on the upside. Therefore, the ultimate peak for the red metal could be significantly above the $6.80 per pound target. I favor the CPER ETF where the only drawback is that it does not trade around the clock, so it can miss highs or lows when the U.S. stock market is not open for business.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2440341899"}