Buying strategic commodities as a tangible asset is a sensible way to spread the risk of loss and hedge your own assets against crises and inflation. However, interested parties should inform themselves well before purchasing strategic metals, as there are a number of things to consider.
Many people want invest their assets in tangible assets in times of high inflation rates and permanent crises. One option is the purchase of strategic metals, which are increasingly in demand by industry for future technologies. These are technology metals such as germanium and rare earths such as dysprosium. People who buy strategic metals acquire them in physical form and sell them on to the processing industry at a later date.
Those who Diversify portfolio with such industrial raw materials and at the same time wants to avoid unnecessary risks and losses, should take these seven tips to heart:
- Only buy strategic metals in their original packaging
The processing industry is the most important customer for strategic metals. Whether companies can process the technology metals and rare earths depends, among other things, on the packaging. Batch numbers and certificates can only be clearly assigned if the raw materials are in original containers from the supplier. However, if they are repackaged in small containers, the quality and origin analyses are no longer traceable. This could make new product quality tests necessary and thus make resale more difficult.
- Pay attention to industrial quality
Depending on the production process, companies require metallic raw materials in certain qualities. The specifications include the degree of purity and the composition with other materials. For the raw material shown in the photo Hafniuma technology metal for superalloys in turbines, the degree of purity in bar form should be over 99.9 per cent. However, the delivery form is also a quality criterion: Rare earths are mainly purchased by the industry as oxides. For the technology metal Indium ingots are favoured by the industry. If the raw materials acquired do not fulfil the requirements of the industry, this makes it more difficult to liquidate them.
- Keeping an eye on industrial requirements
The demand for metal in the areas of e-mobility, renewable energies and hydrogen production will increase significantly in the coming years, predicts the Study "Raw materials for future technologies 2021" by the German Mineral Resources Agency. Demand will develop differently depending on the metal. It is therefore worthwhile finding out about the individual raw materials in detail. In addition to institutions such as the German Raw Materials Agency or the International Energy Agency (IEA), specialised portals such as www.rohstoff.net up-to-date information on developments on the raw materials markets and relevant fields of application.
- Select your own raw materials
The compiled information on strategic metals can form a good basis for independent purchasing decisions. In many cases, an individually compiled commodity portfolio is preferable to a standardised basket of goods, which can only take personal preferences and wishes into account to a limited extent. Ideally, not all money should be invested in a single commodity, but rather broadly diversified across various metals and rare earths.
- Think about resale options when buying
The subsequent resale to the processing industry plays an important role in the purchase of strategic metals as tangible assets. To this end, the provider should be able to demonstrate options for good realisability. These consist of direct repurchase or sales brokerage to industry. Ideally, the dealer should be able to name sectors and companies that are part of the industry's customer base.
- Beware of promised returns when buying strategic metals
It may well be worth speculating on the price development of individual commodities. However, binding statements about how much return can be achieved with technology metals and rare earths should be regarded as dubious. Pricing is subject to various influences such as industrial demand and the development of application areas. In addition to the latter, there are always new fields of application such as renewable energies However, in some traditional areas of application, the demand for raw materials is being reduced through substitution. Natural events, pandemics and political conflicts, which are almost impossible to predict, also have an impact on the commodity markets. It is more responsible to point out the possibilities of preserving purchasing power and protecting against inflation.
- Find trustworthy commodity traders
Very few private buyers are experts in strategic metals and therefore require intensive advice on the purchase of commodities as a tangible asset. Reputable providers can usually be recognised by a few characteristics:
- They provide expert information on industrial metals and the form in which the economy requires them.
- They do not promise capital appreciation.
- They present their contacts in the processing industry and thus identify resale opportunities for a later date.
- They provide information about professional storage options and their own storage facilities.
- And:Â You are not rushing to finalise the deal, because buying strategic commodities to diversify your portfolio takes time.
Commodities are a special asset class. If you know their special features and are well informed, you can benefit from the trend towards diversification. TRADIUM offers you comprehensive information on tangible assets and their areas of application. In addition, the regularly updated price chartsto better understand the movements on the markets.
