Investing in metals: top 5 metals to invest in right now

Investing in metals is a strategy employed by individuals all around the world. Metals are in high demand and come with certain benefits. In this article, we'll introduce you to everything you should know about investing in metals and how you can get started right now.

investing in metals

What are metals?

Metals are a group of elements that share some common characteristics, such as high electrical and thermal conductivity, malleability, ductility, and the ability to form alloys.
Some common examples of metals are:

  • Gold
  • Silver
  • Iron
  • Copper
  • Aluminium
  • Lead
  • Zinc
  • Nickel
  • Platinum

Metals have a wide variety of applications in everyday life and industry, ranging from the production of tools and machinery to electronics, construction, jewellery, medicine, or energy. Also, metals like gold or silver are considered store of value.

Next, let's have a look at the main types of metals.

Precious metals

Precious metals are a subgroup of metals characterised by high demand and significant economic value in the market. Precious metals include:

These metals are considered precious for their unique properties, such as resistance to corrosion and their rarity in the Earth's crust. They also have a long history as a means of exchange, as coins and ingots.

It is important to note that the value of precious metals can fluctuate significantly due to factors such as demand and supply, economic and geopolitical conditions and changes in government policies.

Industrial metals

Industrial metals are mainly used for the manufacture of products and consumer goods. Unlike precious metals, which are valued mainly for their rarity and their demand as an investment, industrial metals are valued mainly for their usefulness in producing goods and services.

Some common examples of industrial metals are:

  • Copper
  • Lithium
  • Iron
  • Aluminium
  • Nickel
  • Zinc

Top 5 metals to invest in

Here are some alternatives to consider when investing in industrial metals.

Investing in lithium

Lithium is actually one of the metals with the highest projections of future demand thanks to the growing popularity of sustainable investment:

  • Lithium is a key element in the production of rechargeable batteries, used in a wide range of products, from cell phones to electric vehicles. With the continued increase in demand for lithium batteries, an increase in demand for lithium is also expected.
  • The growth of the electric vehicle sector is one of the main catalysts for the increase in demand for lithium. Since most electric vehicles use lithium-ion batteries, the increase in electric vehicle production should increase the demand for lithium.
  • The supply of lithium is limited and most of the reserves are located in a few countries. In fact, it is estimated that 85% of the world's lithium reserves are concentrated in the so-called Lithium Triangle, formed by Chile, Bolivia, and Argentina.

Investing in copper

In addition to lithium, copper is another sought-after industrial metal due to its property of conducting electricity, which makes it an important raw material for industrial development. Here are some other important aspects that drive its demand:

  • Copper is a widely used metal in construction, electronics, and vehicle production. It is used to manufacture a range of products, including pipes, electrical cables, transformers, engines, and batteries.
  • Despite the high demand, global copper reserves are limited and 28% of them are concentrated in Chile, followed by Peru (13%) and Australia (12%). However, given the current reserves and the rate of extraction of the red metal, its production is assured for at least another century.
  • Copper is also a key material for the transition to renewable energy sources. For example, solar and wind energy require large amounts of copper for the production of solar panels and wind turbines.
PositionProducing CountryWorld Reserve (tonnes)% of Reserve
1Chile190,00028%
2Australia90,00011%
3Peru86,00010%
4USA38,0006%
5Mexico35,0006%

Source: US Geological Survey (USGS) / January 2022

Investing in aluminium

Let's move on to one of the most important metals at an industrial level, thanks to its versatility in many basic consumer products and its low cost.

  • Versatile: Aluminium is a versatile and lightweight metal, used in a wide range of applications, from food packaging to airplanes and cars.
  • Sustainable Metal: Aluminum is a recyclable and sustainable material that can be reused multiple times without losing its properties.
  • Growing Demand: The demand for aluminium is high and is expected to continue to grow with the recovery of the global economy and the construction of new infrastructure. According to Statista, in fact, the global demand for aluminium is constantly increasing and China, India and Russia are the main global suppliers.
  • Limited Material: Despite the high demand, the supply of aluminium is limited, as the production of aluminium requires a large amount of energy.

Investing in nickel

invest in metals

Nickel is a metal widely used in many industrial sectors, making it a popular choice for investments. Some of the reasons why you may choose to invest in nickel are:

  • Steady Demand: Nickel is used in a wide range of products, from rechargeable batteries to electronics, from stainless steel products to nickel alloys. This means that there is a steady demand for nickel in many sectors, which can make investing in nickel a safer and more stable option.
  • Growth Potential: The demand for nickel is steady, but there is also long-term growth potential due to the increasing use of electronics and the demand for more corrosion-resistant materials in various sectors.
  • Limited Supply: Although there are known nickel reserves around the world, the production of nickel can be expensive and requires advanced technology. In addition, some major nickel producers, such as Indonesia and the Philippines, have imposed restrictions on nickel production to protect their natural resources, which could limit the global supply of nickel.

See the following ranking of the world's nickel reserves by country:

PositionProducing CountryWorld Reserve (tonnes)% of Reserve
1Indonesia21M tonnes22%
2Australia20M tonnes21%
3Brazil16M tonnes16.5%
4Russia7M tonnes7%
5Cuba5.5M tonnes6%

Source: US Geological Survey (USGS) / January 2022

Invest in iron

Iron is an important metal and is used in various applications, making it a reasonable investment choice for the following reasons:

  • High Demand: Iron is used for the production of steel, which is an essential material in many sectors, such as construction, automotive production, and the naval industry.
  • Low Cost: Despite its importance, iron is relatively inexpensive compared to other metals, such as gold or silver.
  • Growth Potential: It is expected that the demand for iron will increase in the future due to population growth and urbanization around the world. For example, more than 700 million people – 10% of the world's population – live in extreme poverty, with about 40% living in destitution.
  • Stability: The iron and steel industry is known to be a stable and predictable sector, which can make investing in iron less volatile than other investments.
PositionProducing CountryWorld Reserve (tonnes)% of Reserve
1Australia90037%
2Brazil38015.6%
3China36014%
4India2409.8%
5Russia1004.11%

Source: US Geological Survey (USGS) / January 2022

How to invest in metals?

There are several ways to invest in metals, ranging from traditional physical holdings to exposure to all kinds of derivatives.

Investing in metal stocks

One of the easiest ways to invest in metals indirectly is by investing in stocks. Here are some popular examples of companies that activate in this sector:

CompanyTickerISINSector
Rio TintoRIO.LGB0007188757Multiresource
BHP GroupBHP.AXAU000000BHP4Copper
Steel DynamicsSTLDUS8581191009Iron
LiventLTHMUS53814L1089Lithium
Anglo American AAL GB00B1XZS820Multiresource
anglo american stock

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Investing in metal ETFs

You can also get exposure to metals through exchange-traded funds (ETFs). A metal ETF is an exchange-traded fund designed to track the performance of a specific group of assets (such as metal stocks or the fund may invest in actual metals). Lithium ETFs, for example, are designed to track the price of various companies involved in the extraction and production of lithium.

ETFTickerISINSector
VanEck Rare Earth and Strategic
Metals UCITS ETF
REMXIE0002PG6CA6Multi-Resources
WisdomTree Industrial Metals
EUR Daily Hedged
EIMTJE00B78NPW60Iron and Steel
Global X Lithium & Battery Tech
UCITS ETF USD Accumulating
LITUIE00BLCHJN13Lithium
Global X Copper Miners UCITS ETFCOPXIE0003Z9E2Y3Copper
WisdomTree NickelNICKDE000A0KRJ44Nickel

👉 Find out how to choose an ETF & the best broker for ETFs

Trading CFDs on metals

CFDs (contracts for difference) are another very popular trading method, as they allow you to trade the price of metals without having to physically own the asset. When trading derivatives, you speculate on the future value of a financial instrument.

There are various types of derivatives, but the most common ones are CFD, spread betting, futures, and options. Once again, eToro offers a wide range of CFDs for trading metals.

Purchase of metals

Finally, there is the possibility of investing in metals by buying them directly. In other words, buy steel, lithium, or copper. However, this option is less practical for individual investors – the costs of transportation, storage, maintenance, safety, security, and other considerations are too much for most individuals.

Advantages and disadvantages of investing in metals

Below is a list of pros and cons of investing in metals.

Some of the advantages of investing in metals:

  1. Steady demand: industrial metals are used in a wide variety of sectors, such as construction, automotive, energy and electronics, which means their demand can be steady and predictable.
  2. Global demand: obviously, if demand is steady in many sectors, in a globalised world that is slowly moving away from extreme poverty, global demand is high and growing.
  3. Economic growth: demand for industrial metals is often linked to economic growth, which means they can benefit from periods of economic growth.
  4. Strategic importance: some industrial metals, such as lithium, have strategic importance in the industry, which can make their value more resilient to market fluctuations. For example, in terms of ecological transition, lithium as an energy storage or copper as an electrical conductor will have an important role.
  5. Wide range of applications: the range of applications is wide, which means their demand can be diversified and not limited to a single sector.
  6. Recycling value: some industrial metals, such as aluminium, have a high recycling value, which means their value can be supported by the demand for recycled materials.

Disadvantages to consider:

  1. Price Volatility: Metal prices can be extremely volatile, meaning they can fluctuate significantly in short periods of time. This is due to strong speculation affecting commodities.
  2. Demand and Supply Dependence: The value of metals can be heavily dependent on demand and supply, which can be unpredictable and subject to unexpected changes.
  3. Storage Cost: If you choose to invest in physical metals, you will have to pay for storage and transportation, which can be costly and difficult.
ProsCons
✅ Predictable and growing global demand❌ Prices can be quite volatile
✅ More and more countries are developing, increasing demand for metals❌ Heavily dependent on supply and demand
✅ Key to many eco-friendly solutions❌ Cost of storage of physical assets
✅ Widely used in many industries 
✅ Some metals are recyclable  

Alternatives to investing in metals

Investing in metals: summary

In conclusion, investing in metals presents a multifaceted opportunity that intersects industry, technology, and intrinsic value. From the timeless allure of precious metals like gold and silver, which hold their worth through economic fluctuations, to the crucial role of industrial metals like copper and iron in powering our modern world, the realm of metal investments offers a diverse spectrum.

The intricate dance between supply, demand, technological advancements, and global trends shapes the metal market's dynamics. Whether seeking stability, capitalising on industrial growth, or hedging against uncertainty, metals continue to hold their place as tangible and strategic assets in the realm of investment, bridging the past, present, and future with a shimmering promise of value.

FAQ

Why should I consider investing in metals?

: Investing in metals offers diversification and a hedge against economic uncertainties. Precious metals like gold and silver historically retain their value during market volatility, acting as a safeguard for your portfolio. Industrial metals like copper and aluminium align with global infrastructure growth, providing exposure to advancing technologies and urbanization.

How can I invest in metals?

There are multiple ways to invest in metals. You can buy physical metals like gold bars or coins, invest in metal-based Exchange-Traded Funds (ETFs), or consider mining company stocks for exposure to the industry. Additionally, futures contracts and options offer avenues for trading metals on commodity markets.

What is the role of metals in a diversified portfolio?

Metals play a pivotal role in diversification due to their tendency to react differently than traditional assets like stocks and bonds. Their performance can be uncorrelated with other markets, providing a buffer against losses in certain economic scenarios.

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