Sscarcity and utility push up the value of metals. The increased demand is boosting the mining industry and providing traders with potential opportunities.
Rising metal prices can also act as a hedge against inflation in the current economic environment. Additionally, the growing demand for rare earth metals is needed for technological gadgets, such as cell phones and microprocessors.
With a growing reliance on computing devices, this can only help propel the mining industry, especially when it comes to rare earth metals. Additionally, device mobility is a growing trend, and that’s where rare earth metals can help.
“You can make a very small rare-earth magnet that will have the same power as a very large iron magnet. So you can miniaturize things that you couldn’t miniaturize before. You can’t walk around with a magnet of five pounds in your cell phone, but you can get away with that neodiminution magnet right now,” says Dr. Paul Ziemkiewicz of West Virginia University.
Double Metal Miners
Savvy traders who sense an opportunity in metal miners can double the leverage on the industry. One such exchange-traded fund (ETF) to consider is the Direxion Daily Metal Miners Bull 2X (MNM) Stock.
The fund, which is up more than 100% for the year, targets daily investment results, before fees and expenses, equal to 200% of the performance of the S&P Metals and Mining Select Industry Index. The Index is a modified equal-weight index designed to measure the performance of equity securities of companies in the S&P Total Market Index that are classified by GICS as belonging to the metals and mining industry.
The metals and mining industry includes companies in the following sub-industries: aluminum; coal and consumable fuels; copper; diversified metals and mining; gold; precious metals and minerals; money; and steel. The index does not include metal commodities.
MNM data by YCharts
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.