Base metals are often considered to be the ugly stepchild of the shiny, attractive, and oft-discussed older brother: precious metals.
While metals such as zinc and copper on the surface do not carry the aura of gold or silver, these important metals play a very important role in economic development and growth over the long-term. As a safe haven, many long-term investors have looked to a mix of precious metals and base metals as a safe haven for the long-term, as each sector carries with it a different growth profile.
One base metals ETF which has garnered interest of late given the recent run in the price of base metals such as zinc and copper is the iShares S&P/TSX Global Base Metals Index ETF (TSX:XBM).
This ETF has risen nearly 18% since the beginning of the year as base metal prices have continued their broad recovery, leading to forward earnings estimate improvements among analysts and investors alike.
The rise in the commodity prices of many base metals has been linked to a number of structural supply and demand related drivers which propose long-term price growth in the sector.
Under-supply linked to years of lower-than-needed investment in various base metal mining operations combined with strong demand forecast for the next 10 to 20 years has resulted in a situation in which many analysts are calling for a structural deficit to persist for the foreseeable future, leading to a continued rebound in prices moving forward.
Invest wisely, my friends.
