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Metals

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What Are Metals?

The periodic table lists every recognized chemical element, and a number of them—rare earth, base, and precious metals among them—offer attractive investment opportunities. These metals give traders and investors a wide variety of options, and many can also be bought as ingots for those who prefer to hold the physical metal itself.

Key Takeaways

  • Base Metal Access: Investors can enter the base metals market by buying shares of companies such as U.S. Steel, trading futures and options, or investing in exchange-traded funds (ETFs) focused on these commodities.
  • Precious Metal Options: Precious metals open up several investment routes, including mining company stocks, ETFs tied to both the metals and related equities, futures contracts, options, and outright purchases of the physical metal.
  • Rising Rare Earth Demand: As rare earth metals become increasingly essential to modern technology and the global economy, interest has grown both in the companies that mine them and in ETFs built around the sector.

A Brief History of Stocks

The concept of offering company shares dates back to the 16th century, when governments issued business charters that let individuals invest. As democratic principles shaped the growth of free markets in the U.S. and elsewhere, regulation laid the groundwork for exchanges such as the NYSE, where investors could trade stock. Over time, the emergence of derivatives, stock indices, and secondary markets helped shape the investing landscape we recognize today.

Base Metals

In chemistry, base metals are those that oxidize or corrode relatively easily. This category covers industrial staples like copper (Cu), nickel (Ni), aluminum (Al), zinc (Zn), lead (Pb), tin (Sn), and iron (Fe), along with steel, an alloy of iron and carbon.

Base metals are abundant and essential across a broad range of industrial and commercial uses—copper in plumbing, aluminum in packaging, and steel in car manufacturing, to name a few. Because they’re more plentiful than precious or rare earth metals, they tend to cost less, and their prices typically move with shifts in demand for the products they help create.

Investors and traders have several ways into the base metals market. One is buying shares of companies tied to a specific metal, like U.S. Steel (X) for steel or Alcoa (AA) for aluminum. Another is trading futures and options on individual metals, such as copper futures (HG) or copper options (HX) on CME Globex.

Several exchange-traded funds also focus on base metals. The Invesco DB Base Metal Fund (DBB) tracks futures on aluminum, zinc, and copper. The SPDR S&P Metals & Mining ETF (XME) holds companies in the metals and mining sector, while the iShares U.S. Basic Materials ETF (IYM) covers firms that produce key raw materials.

Precious Metals

Precious metals are rare elements known for their luster, high melting points, and low reactivity. Softer and more malleable than most other metals, they’re remarkably versatile. This group includes silver (Ag), gold (Au), platinum (Pt), and palladium (Pd). Their scarcity gives them significant value, and they’re widely used in jewelry, art, coinage, dentistry, electronics, medical devices, and as financial assets.

As with base metals, there are many ways to invest in precious metals. Gold in particular has functioned as a reliable store of value for centuries, often held as coins, bars, or jewelry, and it’s commonly seen as a safe-haven asset during periods of economic uncertainty. Beyond physical gold, investors can gain exposure through stocks, mutual funds, futures, options, and ETFs linked to precious metals.

Investors might look at companies such as Eldorado Gold Corporation (EGO) and Agnico Eagle Mines Limited (AEM), both Canadian firms focused on gold production. For derivatives, CME Group lists several gold futures contracts, including the standard 100 troy ounce contract (GC), the 50 ounce e-mini (QO), and the 10 ounce micro gold contract (MGC), along with gold options in 100 ounce units (OG). Comparable contracts exist for silver, platinum, and palladium.

A range of ETF options also exists for precious metals exposure. Well-known choices include the physically backed SPDR Gold Trust ETF (GLD), the iShares Silver Trust ETF (SLV), and the VanEck Vectors Junior Gold Miners ETF (GDXJ). Other notable funds include the Invesco DB Precious Metals Fund (DBP) and the Aberdeen Standard Physical Palladium Shares ETF (PALL).