Copper bullion – Pros and cons

Demand for copper has been rising at bullion dealers. The number of products available has also risen dramatically in recent years.

Mints and refiners are responding to increased demand with a wide variety of new copper rounds and bars with some interesting designs. The number of questions we get from clients has been rising, along with the interest.

There are a few good reasons to own copper, along with some good reasons to tread lightly when making an investment in the industrial metal.

On the negative side, it is hard to make a significant investment in copper bullion. The space required for storage and the weight of the metal make it prohibitive for most people to purchase in bulk.

Ten thousand dollars’ worth of copper pennies at the current price amounts to more than a ton of metal – roughly 63 bags of coins weighing 34 lbs. each.

Copper bullion isn’t eligible for depository storage, so unless an investor has a forklift and plenty of room, taking a large investment position in physical copper will be off the table.

Meanwhile, copper bullion products can be expensive relative to the underlying commodity price. The cost of fabricating rounds and bars in the 1 oz, or smaller, size exceeds the metal’s value. In a sense, what a buyer is actually purchasing isn’t so much the metal as it is the machine time and labor.

Retail copper bullion isn’t nearly as liquid as gold and silver bullion.

While demand is growing, many precious metals dealers aren’t buying copper. Dealers that do, such as Money Metals, will buy back the fabricated rounds and bars, but not copper pennies. (Sorting copper pennies from the newer zinc pennies requires some large and specialized industrial equipment.)

The next consideration can be considered either a pro or a con, depending on the investor’s objectives...

Copper is an industrial metal, rather than a precious metal. Investors who are bullish on the economy may find copper attractive.

Alternatively, investors looking to hedge against uncertainty and economic turmoil probably don’t want to make a bet on industrial demand driving copper prices higher.

While it usually won’t make senses to plow a lot of money into copper bullion, there are some good reasons to own a little of it.

Copper is a beautiful looking metal, and it can be a great conversation starter.

It is inexpensive to hand out to people as a gift. It is a good way to get people talking about principles such as honest money and liberty. Copper rounds and bars are available in some interesting and patriotic designs to help that along.

Preppers will often add a bit of copper to their barter stash. It has a unit cost even lower than silver, so it can fill a gap. The idea is that copper might be used in the smallest transactions – perhaps for a candy bar or soda.

Copper pennies (minted in 1982 or earlier) are the most cost-effective best option, and their melt value is about 3 cents each. The caveat is that pennies are currently more difficult to sell for the reason outlined above. That said, they can be purchased much closer to melt value than rounds or bars.

And these pennies come with an added bit of insurance. There is a floor hardwired under the price. As circulating legal tender, each penny will be worth at least 1 cent no matter how low copper prices might go.