Demand for rare metals will continue to increase as our technology needs increase. But the limited supply of these metals has countries positioning themselves for the future. Soon, you may be able to capitalize on the uber-rarity with exchange traded funds (ETFs).
Reflecting increased investor interest in minor metals, Steve Dew of Index Universe reports that Van Eck Global has filed with the SEC to start a new ETF that will track the Minor Metals Index. The ETF does not yet have a ticker, but it will be called the Market Vectors Minor Metals ETF. The fund will hold 30 companies involved in the mining and production of such metals.
Global X also has a lithium ETF in registration, and the world’s first minor metals ETF is already up and running in Switzerland.
It’s clearly an area that investors want in on, and the ETF providers know that. Minor metals, for the uninitiated, are rare metals like gallium, mercury, selenium, silicon, bismuth and cobalt. They’re industrial metals that typically are not traded on exchanges because of their low trading volume.
According to Nikki Tait and Joshua Chaffin of The Financial Times, a high-level expert group will recommend, in response to warnings of future supply risks, that “Europe should support mining exploration and improve recycling of critical minor metals such as antimony, cobalt or rare earth elements.” [5 ETFs to Play a U.S. Recovery.]
However, unlike in the United States, the group will not recommend stockpiling the minor metals that are deemed most likely to be in shortage.
Despite the expert groups recommendations and the United State’s efforts to increase minor metals reserves, some traders do not think supply for these rare metals will be any scarcer than for more common metals such as copper. [Steel and Copper ETFs In Demand.]
A notable driver of the shortage fears is the fact that the supply of these minor metals is concentrated in only a handful of countries, most notably China.
According to Xiao Yu of Bloomberg, China is continuing its plans to restrict minor metals shipments. China says the curbs reflect an effort to conserve resources and limit pollution. The World Trade Organization is now investigating whether China’s curbs on exports give Chinese manufacturers an unfair edge. [Why Copper ETFs Are Swooning.]
Whether China has an edge, it remains true that the demand for these minor metals will only grow as demand for electronics and technology applications grows.
For more stories about commodity ETFs, visit our commodity ETFs category.
Sumin Kim contributed to this article.