I am interested in copper investing and have some questions, but as a total newbie in this area I need some advice from ASFers who might have a better idea than me. People with copper equity experience, not just in the derivatives or warehousing sense.
Now don't get me wrong, I am not bullish copper at the current price. But based on various research I've been conducting for my own personal interest recently, I am thinking if prices follow their normal seasonal basis then maybe prices at the end of this year will be more interesting for copper bulls. The timeframe of interest would be a holding duration about 9-12 months.
To that end I've been examining the various instruments and possibilities for expressing my view in the market.
Ideally I would like to buy long-dated call options on warehoused physical copper, but it seems such instruments (iShares and JPM want to start physical copper ETFs) are almost, but not available for trading yet.
So should I be buying (options on) copper futures for Sep/Dec delivery on the COMEX or LME? Then I will need to hedge my currency risk!
This leaves Aussie copper producers (since I don't see copper futures listed on the ASX website). The obvious choice being BHP (mostly based on liquidity). But my experience in this field is minimal. Some preliminary research does indicate a decent correlation between BHP and the AUD copper price over a good time basis, but my mind still has the nagging question of equity exposure when what I want is copper exposure.
Fundamentally, how rational is it to use BHP (or similar -even basket of- stocks) as a proxy? Aren't these companies profits derived from contractually settled copper prices at levels which may or may not reflect the current spot or front month price? Or are they exposed to spot/near spot transactions on a regular basis?
Are there any well known (read, liquid) ASX equities which tend to stockpile lots of copper?
I wouldn't mind equity proxy as I'd also be interested in zinc exposure, but that isn't directly relevant.
Thoughts and advice appreciated.