Gold prices took a major tumble in the middle of April 2013. The main reason cited by many experts was the fall in inflation around the world. Falling inflation means that gold is no longer the valuable hedge it was previously and investors are wondering why they need it. The fall was an unpleasant surprise for many gold investors who had expected the rise in value to continue. Many pointed to the Federal Reserve’s bond buying program which was expected to provide stimulation to the economy and thus improve the value of gold. Things do not look positive for gold as the price fall is just one more point on a long list of reasons to sell. At the same time, the list of reasons to buy rare metals continues to grow. Unlike gold, which has no intrinsic value, these metals are actually useful in a number of industrial applications.
What you are probably are not aware of however, is that there is a new asset class of metals, called rare and strategic metals, that will continue to go up in value in the foreseeable future regardless of what happens to gold.
Why Rare Metals Are Rare and may outperform Gold
in the years to come!
Most of these metals are produced only at the hundreds of tons level each year and this cannot be significantly increased. They are the by-products of ore refining, and therefore unless ore refining is significantly increased, they remain a relatively finite end product. The definition of rare is generally any metal production below 35,000 tons per year.
China is also the main user of these metals and is exporting less to the outside world while retaining most of what it produces as its demand grows. These factors make rare earth elements more costly and the need is not likely to go down any time soon.
Today, these metals are now used in over 80% of all products today. They are, as the National Geographic described in 2011, The Secret Ingredient of almost Everything!
How Rare Metals Are Used
These are the elements on which modern technology runs. Examples of how they are used include:
- In making magnets for electrical motors
- For the rechargeable batteries that power hybrid vehicles
- In flat panel displays for computers and televisions
- To make various types of medical and military equipment.
The importance of these metals for technological innovation is why they could make a good addition to your portfolio.
Investing in Rare Metals Versus Investing in Gold
While trading in precious metals like gold is almost as ancient as civilization itself, trading in rare metals is fairly new. Much of the world’s gold has already been exploited and is in the hands of the top investors, with very little to be gained by newcomers at the bottom. With these metals (as with many other types of commodities) those who get in on the ground floor are likely to see the most benefit as the market grows.
Another benefit of trading in these metals is the fact that they are not sold on exchanges, so trade is restricted. The restriction lowers your likelihood of encountering fraud when compared to gold.
The variety or rare and strategic metals allows you to have a very diverse portfolio compared to just gold.
While gold has proven itself over time, demands do change. Those investors who want to be players with a new asset class now have the opportunity. Rare metals present the stability and potential for growth that you should be seeking from your investments, average 12% value increase per year, last 4 years.
Rare Metal Spotlight – Rhenium
If you are an interested in rare strategic metals, you might want to look at Rhenium for your portfolio.
- jet engine parts such as combustion chambers, turbine blades, exhaust nozzles
- gas turbine engines – like in jets, backup generators, submarines
- temperature controls – like your home thermostat
- heating elements – like on your electric stove
- mass spectrographs – for determining the elemental composition of a sample
- electrical contacts – such as power switches or buttons
- electromagnets – found in motors, VCR’s, tape decks, hard drives, and many other products
- semiconductors- found in radios, computers and telephones and many other electronic devices
- vacuum tubes – such as inside your TV
- micro tubing – such as used in medical devices
- metallic coatings – such as coating the rocket engines for NASA
- thermocouples – devices for measuring extremely high temperatures
- catalyst (combined with platinum) in creating lead-free, high-octane gasoline
- catalyst in converting petroleum into heating or diesel oil
- catalyst in the hydrogenation of fine chemicals
- quantum computers (when combined with silicon
Aircraft engine manufacturers Rolls Royce, Pratt and Whitney, and General Electric (the main consumers of the world´s rhenium supply) have been attempting to lower the amount of rhenium used in engines, because global demand for it is in danger of overtaking supply. So far the performance results have been disappointing. The demand for rhenium looks unlikely to diminish as almost the entire world commercial airline fleet is being replaced in the next 10 years with huge contracts at Boeing and Airbus, in particular expecting to double the fleet over the next 20 years. In addition to all military demand, this ensures a strong demand.
Production level 46tons, current demand 53 tons pa.
Source: Click here