Metals
WHAT ARE METALS?
The periodic table contains all recognized chemical elements, and several of these — such as rare earth, base, and precious metals — provide appealing investment opportunities. These metals present a range of choices for both traders and investors, and many are also available as ingots for those interested in physical ownership.
KEY TAKEAWAYS
Investors can enter the base metals market by purchasing shares in companies such as U.S. Steel, trading futures and options, or investing in exchange traded funds (ETFs) that focus on these commodities.
Precious metals provide multiple investment options, including mining company stocks, ETFs tied to both metals and related equities, futures contracts, options, and direct purchases of physical metal.
With rare earth metals becoming more essential to modern technology and the global economy, interest has increased in companies that mine them as well as in ETFs centered on the sector.
A Brief History of Stocks
The idea of offering company shares began in the 16th century, when governments granted business charters and allowed individuals to invest. As democratic values shaped the growth of free markets in the U.S. and abroad, regulations created the foundation for exchanges like the NYSE, where investors could trade stock. Over time, the introduction of derivatives, stock indices, and secondary markets helped form the investing landscape that exists today.
Base Metals
In chemistry, base metals are defined as metals that oxidize or corrode easily. These include industrial essentials such as copper (Cu), nickel (Ni), aluminum (Al), zinc (Zn), lead (Pb), tin (Sn), and iron (Fe), along with steel, an alloy made from iron and carbon.
Base metals are plentiful and critical to a wide range of industrial and commercial applications. Examples include copper in plumbing, aluminum in packaging, and steel in automotive manufacturing. Since they are more common than precious or rare earth metals, they are usually more affordable. Their prices often move in response to changes in demand for the goods they help produce.
Investors and traders can participate in the base metals market through several avenues. One method is investing in companies that focus on specific metals, such as U.S. Steel (X) for steel or Alcoa (AA) for aluminum. Another approach is trading futures and options on individual metals, such as copper futures (HG) or copper options (HX) on CME Globex.
There are also multiple exchange traded funds (ETFs) that focus on base metals. The Invesco DB Base Metal Fund (DBB) follows futures for aluminum, zinc, and copper. The SPDR S&P Metals & Mining ETF (XME) includes companies in the metals and mining industries, while the iShares U.S. Basic Materials ETF (IYM) covers firms producing key raw materials.
Precious Metals
Precious metals are rare elements recognized for their luster, high melting points, and low reactivity. Softer and more malleable than most other metals, they are highly versatile. This group includes silver (Ag), gold (Au), platinum (Pt), and palladium (Pd). Due to their scarcity, they hold significant value and are widely used in jewelry, art, coins, dentistry, electronics, medical instruments, and as financial assets.
Like base metals, there are many ways to invest in precious metals. Gold in particular has served as a reliable store of value for centuries, often kept in the form of coins, bars, or jewelry. In times of economic uncertainty, it is commonly regarded as a safe haven asset. Beyond physical gold, investors can gain exposure through stocks, mutual funds, futures, options, and exchange traded funds (ETFs) linked to precious metals.
Investors may look at companies such as Eldorado Gold Corporation (EGO) and Agnico Eagle Mines Limited (AEM), both Canadian firms specializing in gold production. For derivatives trading, CME Group offers several gold futures, including the standard 100 troy ounce contract (GC), the 50 ounce e mini (QO), and the 10 ounce micro gold contract (MGC). Gold options are available in 100 ounce units (OG). Comparable contracts exist for silver, platinum, and palladium.
There are also a variety of ETF options for precious metals exposure. Well known choices include the SPDR Gold Trust ETF (GLD), which is physically backed, 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).