An investment in tangible assets does not have to be limited to property or works of art. Metallic raw materials can also be interesting as tangible assets.
To the Protection against inflation or to diversify the portfolio, it is possible to purchase commodities physically. You can choose from energy sources, precious and industrial metals and agricultural products. The decision should be carefully considered, as some commodities are less practicable as tangible assets than others.
Diverse selection of raw materials with some pitfalls
From agricultural products to fossil fuels and metals, there is a wide range of commodities. However, not all of them are suitable as physical investments. Agricultural products such as coffee, cocoa and wheat cannot be bought and sold in the quantities required by industrial customers in a practicable manner. The short shelf life of agricultural commodities also speaks against direct investment. Energy sources such as crude oil or coal also pose challenges for private investors. Hardly anyone has access to the producers or the necessary warehouses or tanks for storing the sometimes hazardous substances. The costs for storage space and transport can also quickly add up.
Strategic metals convince as tangible values
The situation is different for strategic metals. Thanks to their physical properties, they can be stored in small spaces and almost indefinitely. In addition, private buyers have had access to industrial raw materials via specialised dealers for some years now. In most cases, this includes the possibility of professional storage for little money. At a later date, the metals can be sold on to the processing industry. However, the argument of increasing demand for the metals from industrialised and emerging countries is likely to be the strongest. Strategic metals are used in many everyday applications such as consumer electronics and fibre optic cables, as well as in wind turbines and solar panels. This makes them indispensable for the future of our society, both in terms of maintaining our standard of living and shaping a more sustainable, climate-friendly everyday life.
The following Figures published by the Statista Research Departmentillustrate the industry's hunger for raw materials. They show the development of demand using the example of rare earths, a raw material group within the strategic metals:
- Wind turbines: Global demand will rise from 3,167 tonnes in 2018 to 11,640 tonnes in 2040
- Permanent magnets: Global demand will increase from 5,620 tonnes in 2018 to 20,340 tonnes.
- E-motors for motor vehicles: Demand will explode and grow from 1,930 tonnes in 2018 to 38,880 tonnes.
Further areas of application and future technologies are constantly being added. In combination with the limited availability of raw materials, there are potentially good opportunities for returns.
These metals are suitable as investments
Private buyers who want to invest money in strategic metals can choose from over twelve commodities. There is access to the aforementioned rare earths and technology metals via recognised specialist dealers
The rare earth element terbium is used for doping in semiconductors.
Within the rare earths are Dysprosium, Neodymium, Praseodymium and terbium are particularly interesting. All four raw metals are required for the production of permanent magnets, which in turn are used in everything from wind turbines and electric motors to loudspeakers and smartphones. Terbium is also used in the manufacture of semiconductors.
In the case of technology metals Gallium and Indium These are required by the industry for the production of photovoltaic modules. Another technology metal is Germaniumwhich is processed together with indium in fibre optic cables.
Precious metals are another group of raw materials that are of great importance to the industry. Thus silver plays an important role as an electrical conductor in electric cars. Platinum, Palladium and Rhodium are a component of exhaust gas catalytic converters. Iridium will play a key role in the production of green hydrogen and thus contribute to the energy transition.
If you want to buy one or more of these industrial commodities and at the same time avoid unnecessary risks and losses, you should also take a few tips to heart. Our guides "Buying strategic metals: These seven things to consider" summarises the most important points.
