As good as gold.
    Category: Smart Investing 2016 By : Alberto Migliucci Read : 606 Date : Monday, June 20, 2016 - 02:57:44

    Gold is shining in 2016 soaring 17% in the first quarter and thrashing returns in major stock and bond indices. Up until fairly recently it was hard to find an asset class more unloved than natural resources, with many of the major commodities, such as crude oil, iron ore, coal, copper, aluminum and even gold, trading near multi-year lows on the back of years-long losing streaks.

    Global investors propelled money into the gold market, a traditional safe-haven investment, early in the year as equity markets crashed in a short-lived correction. Stocks have since recovered, but gold hung onto most of its gains, with spot prices rising 20% so far this year, something that’s been achieved despite weakness in physical demand from top consumers China and India.

    Western buyers have returned to the precious metal as concerns over the global economy have intensified, and given these probably have further to run, gold’s rally may have more shine. Especially if Chinese consumers start buying as they worry about the depreciation of the yuan, and Indians demand more as their economy performs strongly.
    However, gold equities have been even stronger performers than the yellow metal, with Newcrest Mining jumping 47% since the start of the year and Barrick Gold Corp up a stunning 125%. Those gold miners that have worked hard to cut costs and have high-grade operations should start to see rising profits, perhaps justifying loftier share valuations.

    Is silver the next “gold”? The precious white metal is currently reigning near a 12 month high of $17.43 an ounce, its importance in a variety key industries such as semi-conductors and solar panels have resulted in a surge in demand for the white metal. With prospects of surging demand and plummeting supply, the stage is set for rising silver prices. The gold/silver ratio is near all-time highs. The average historic gold/silver ratio is 47:1, as compared to the current gold/silver ratio of 81:1. This provides a potential investment opportunity in silver miners.

    One commodity that is looking as good as gold is lithium, the lightest metal on earth and referred to as “white petroleum,” is an essential component of modern batteries, which are expected to enjoy boom years ahead as electric cars become more commonplace.
    Tesla CEO Elon Musk recently commented: “In order to produce half a million cars a year…we would basically need to absorb the entire world’s lithium-ion production.” Problem is, there isn’t a traded market for lithium, unlike gold, or other key metals or commodities. Lithium doesn’t have a spot market and isn’t freely traded on an exchange. Prices are negotiated individually through contracts between buyers and sellers, and there are numerous grades of the metal as well, making it extremely hard to get direct exposure to its positive story.

    One specialist metal service reports lithium carbonate, which is used in batteries, has risen almost 80% in the past year. But so far the main way to play lithium has been to look for the next big thing in mining, with junior miners enjoying spectacular gains just by mentioning lithium tenements in press releases.