Wondering how to start investing in base metals? We can help you begin with this brief overview of the space.
While precious metals tend to get the most attention from investors, gold and silver are not the only profitable metals options available to investors. Investing in base metals can also be a lucrative endeavor for those interested in natural resource commodities.
More abundantly found in nature than any precious metal, base metals fetch much lower prices in the commodities market. Base metals have myriad commercial and industrial purposes, with copper, nickel, zinc, lead and iron being some of the most common base metals.
All base metals are affected by diverse factors, though in many cases these markets are linked by the common industries served by base metals. Knowledge of those factors is essential for investors wanting to gain exposure to the base metals sector. With that in mind, we’ve put together a brief overview of a few key base metals and how to invest in them. Read on to learn more.
This article continues below the Base Metals Investing Table of Contents.
Base Metals Investing Table of Contents
The articles listed below provide an overview of investing in base metals from Base Metal Investing News.
Start Here – Investing in Base Metals
- How to Start Investing in Base Metals
- A Brief Overview of the Copper Price Today
- Understanding the Zinc Spot Price and Zinc Futures
- Nickel Market Basics: Supply and Demand Dynamics
- Why Consider Investing in Iron Ore?
- How to Invest in Lead
Base Metals Prices 2020 and Investing Opportunities
- Copper Price Update: Q1 2020 in Review
- Copper Price Update: Q2 2020 in Review
- Copper Price Update: Q3 2020 in Review
- Zinc Price Update: H1 2020 in Review
- Nickel Price Update: H1 2020 in Review
- Iron Outlook 2020
- Lead Outlook 2020
Investing in base metals: Copper
Copper is perhaps the best-known base metal, and it’s not hard to see why. This industrial metal has a wide range of applications and is used in everything from wiring and plumbing to coinage and electronics. Indeed, copper is so widely used that it’s considered a valuable indicator for the health of the global economy — earning the red metal the moniker “Dr. Copper.”
Over the past few years, the price of copper has faced highs and lows in light of ongoing trade tensions between China and the US, along with supply concerns. While copper has generally trended downwards as of late, many CEOs are bullish and some analysts are “cautiously optimistic” on copper.
Copper is relatively easy to invest in. Those interested in gaining exposure can invest in copper futures, copper exchange-traded funds (ETFs) and, of course, copper stocks. Many major miners are involved in the copper space, but those interested in smaller copper-mining companies also have a slew of options. As with many metals investments, it’s important to do your due diligence before jumping in.
Investing in base metals: Zinc and lead
While copper is one of the most popular base metals, zinc has definitely been getting some attention lately. Though the zinc price faced a rough few years, it’s begun to make a gradual comeback, with many experts remaining optimistic about its prospects.
Their positivity largely stems from supply-side factors — over the last several years a number of large zinc mines have closed, and the consensus is that not enough new mines have come online to replace that output. The COVID-19 pandemic has led to further tightening on the supply side.
Any discussion of zinc would be incomplete without a mention of lead. While they have different uses, the metals tend to be found together, often in conjunction with copper. For that reason, zinc market activity can affect lead market activity (and vice versa).
As with copper, those looking to invest in lead in zinc can look at futures, exchange-traded products like ETFs or stocks. Since the metals are often mined in conjunction with each other or with copper, it is difficult to find pure-play zinc- and lead-mining companies.
Investing in base metals: Iron and nickel
Iron ore and nickel are the two final base metals that investors may want to consider. Both are essential in the world today and are increasingly getting investor attention.
Iron ore in particular has trended upwards lately. This natural resource is a key component of steel, and developments in China have traditionally been a key driver of global iron prices — that’s because it’s the world’s largest producer, consumer and exporter of steel. While there are concerns about a slowdown in Chinese growth, supply concerns have helped boost the commodity during 2020.
Nickel prices have had a choppy trading pattern in the past few years, marked by steep plunges and gradual recoveries. While some believe a price rise is coming, others think that choppiness will continue until new price drivers emerge. Some have suggested that demand for electric vehicles (or perhaps Elon Musk’s call for more nickel) could be the shock the nickel market needs.
Both of these metals could present opportunities for investors, and again there are myriad ways to enter the space. To get exposure, there are base metals-focused ETFs as well as nickel futures and iron futures, and of course, there are options for investments in mining stocks.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.