This Could Be The Next Commodity To Soar
With the war in Ukraine still raging and even escalating, one area of the market has been very reactive to developments brought about by the prolonging of the conflict. The war is creating an environment where commodity prices have been surging, from food products to energy, everything is getting more expensive.
Among other things that often get overlooked when it comes to investing, commodities often fly under the radar, and perhaps it boils down to the fact that these investments are quite as sexy as investing in the next big tech company.
However, in times like these, the attractiveness of these investments increases as their prices do.
There are the staples in the commodity market. You have your gold, silver, oil, heck even wheat or soybeans, but one that doesn’t often make the list, aluminum.
As the war drags on for another month, the United States has floated the idea of restricting imports of Russian aluminum as it charts possible responses to Moscow’s military escalation in Ukraine, reports suggest.
A move such as this, which has not been finalized, would likely boost global prices for the metal used in a wide range of consumer products and could reverse a previous White House stance that such sanctions could wreak havoc on global markets.
Like many of you, I have never really given much thought into investing in this metal. However, we can’t ignore opportunity when it comes knocking.
Despite the price surge, aluminum shows a lot of promise going into the future. The global aluminum smelting market is expected to grow by $26.99 bn during 2022-2026, accelerating at a CAGR of 4.18%.
While this isn’t the aluminum market’s growth rate, this data points alludes to a very important development in the market.
As technology becomes more advanced and ubiquitous, the high demand for lightweight materials has never been higher and is one of the prime reasons driving the aluminum smelting market growth during the next few years. In addition, the growth of the transportation industry and the development of green buildings will lead to sizable demand in the market.
So what does this mean for us investors? Well, as prices of the metal go up, so should the prices of stocks that are related to the aluminum industry, such as the stocks shown below.
Before investing, however, there are some questions that you should ask yourself. Like, is this a trade or investment? Meaning, is it a short term investment or will the securities you’re buying find a forever home in your portfolio.
More importantly, you should probably ask if this investment is even right for you. We talk about a lot of themes in this newsletter since it is our job to keep you informed on all things market related. But, we are not giving financial advice, rather, we are trying to open your eyes to all the possibilities.
This is just another opportunity, only you can decide whether it’s an opportunity for you to take.
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