Scarcity and utility push the value of metals. Increased demand drives the mining industry and provides traders with potential opportunities.

Rising metal prices can also serve as an inflation hedge in the current economic environment. Additionally, increasing demand for rare earth metals is necessary for technological gadgetry, such as mobile phones and microprocessors.

With an increasing reliance on computer devices, this can only help propel the mining industry, especially when it comes to rare earth metals. Furthermore, the mobility of devices is an increasing trend, which is where rare earth metals can help.

“You can make a very small magnet out of rare earth that will have the same power as a very large iron magnet. So you can miniaturize things you couldn’t miniaturize before. You can’t walk around with a five-pound magnet in your cell phone, but you can get away with that neodiminutive magnet right now,” says Dr. Paul Ziemkiewicz of West Virginia University.

Double Up On Metal Miners

Savvy traders who sense an opportunity in metal miners can get double the leverage to the industry. One such exchange traded fund (ETF) to consider is the Direxion Daily Metal Miners Bull 2X Shares (MNM).

The fund, which is up over 100% for the year, seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P Metals and Mining Select Industry Index. The index is a modified equal-weighted index that is designed to measure the performance of the equity securities of companies in the S&P Total Market Index that are classified by the GICS as being in the metals and mining industry.

The metals and mining industry includes companies in the following sub-industries: aluminum; coal & consumable fuels; copper; diversified metals & mining; gold; precious metals & minerals; silver; and steel. The index does not include metal commodities.

MNM Chart

MNM data by YCharts

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