Gold has been receiving a lot of attention lately as prices will continue to set record highs in 2024.
But gold is not the only commodity that is rising in price. Due to events that have affected global and domestic supply and demand, the value of a number of other metals is also rising and exceeding their own historical highs.
These metals, such as silver, copper and aluminum, are flying under the radar while their prices rise, which may have investors thinking about opportunities beyond gold.
Why are copper prices rising?
Although copper is an industrial metal and not a precious metal, demand for it is growing in China and the United States. With the transition to green energy being the main driver, this appears to be a sustainable long-term trend. In addition to its wide industrial uses, copper is a critical component in solar panels, wind turbines, electric vehicle charging cables, and electric vehicle charging stations.
A record 1.189 million electric vehicles were sold in 2023, making electric vehicles the fastest-growing vehicle category by sales, according to Kelley Blue Book. In addition, data from the U.S. Energy Information Administration shows that renewable electricity generation capacity surpassed coal and nuclear power last year and is on track to approach natural gas capacity by 2025.
This, as well as continued demand for industrial applications such as plumbing, electrical and appliances, has driven copper prices higher. The ductile metal has been trading sideways for the past month, but has gained more than 11% so far in 2024.
As a result, copper-backed stocks are rising in tandem. Numerous exchange-traded funds (ETFs) use leverage on the metal, such as the Global X Copper Miners ETF (COPX), which is up 17% this year.
Silver is no longer inferior to gold
Even though gold hit an all-time high in late October, it has trailed silver by 38% to 42% this year. Silver remains below its all-time high, but is currently trading at its highest prices since November 2012.
Demand for the metal continues to outpace supply as silver and its alloys are integral to the production of batteries, LED chips, medicine, nuclear reactors, solar panels, semiconductors and touch screens. Demand is expected to reach 1.2 billion ounces this year, the second-highest level ever, according to the Silver Institute.
Like gold, silver is seen as a safe-haven asset that performs well during periods of geopolitical unrest. With tensions escalating in the Middle East and the war between Ukraine and Russia showing no end, the price of silver should remain high.
Accordingly, silver-backed ETFs are surging. For example, the iShares Silver Trust (SLV) has seen nearly 38% growth in 2024.
New sanctions against Russia stimulate aluminum prices
Another industrial metal, aluminum, has risen 22% in 2024, outpacing the S&P 500’s 21% gain in October.
Ongoing US and UK economic sanctions against Russia, the world’s third-largest producer of the metal, have pushed prices higher as global supplies dwindle.
While aluminum is unlikely to surpass the all-time high set in March 2022, it is likely to continue rising as demand for the lightweight, strong and corrosion-resistant metal grows. According to the World Economic Forum, demand is expected to increase by almost 40% by 2030 as “transportation, construction, packaging and electrical engineering will drive demand and account for 75% of total metal required.”
The rally in aluminum stocks is similar to that of copper and silver, with major stocks like Century Aluminum (CENX) and Alcoa (AA) up 49% and 21%, respectively, this year.
Other metals are coming next – and how to invest safely
Copper, silver and aluminum aren’t the only metals that will overtake gold in 2024. Tin prices have been supported by outbreaks of violence in areas critical to ore mining in the Democratic Republic of Congo and Rwanda. Flexible metal prices have risen 29% this year.
Zinc is also joining the rally. China, the world’s largest consumer of zinc, recently saw its smelter activity increase at the fastest pace in more than a year; Similar trends are developing in the USA and Germany. As a result, zinc prices increased by 21% in 2024.
Platinum and palladium, both precious metals, are up 7.72% and 12.15%, respectively, this year.
Although base and precious metal prices have been rising recently, short-term trends should not dictate your investment strategies. For example, shares of the aforementioned aluminum producer Alcoa rose to a record high in the first quarter of 2022 amid ongoing supply chain issues. But investors who were waiting for investment growth saw their shares fall sharply over the next six months, with prices falling by about 63%.
A safer approach to portfolio diversification with metals exposure is to select a metals-focused ETF that is not supported solely by short-term factors. ETFs provide broad industry exposure by allocating funds across a basket of stocks, and this approach can be bolstered by choosing a metal-focused ETF with long-term tailwinds.
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