Lead (Pb) has a reputation for being one of the most hazardous metals where human health is concerned, thus, the concern over lead exposure in paints, pipes, and roof shingles, to name a few. But the soft and malleable metal has its safe uses, too, such as in medical vests used for effectively shielding against radiation, in construction projects, and in weights, ammunitions and batteries.
And then there’s the fact that lead is among the best metals for investments! Of course, there are risks and rewards to lead investments but since this is also true for all other types of investments, such as stocks, bonds and real property, the trick lies in achieving the right balance. The best way to minimize the risks and maximize the rewards in lead investments are the right education, the relevant information, and the reliable sources, as well as the right mentors.
Here’s a few pieces of important information that you can use in getting your first exposure to lead investments. Keep in mind that the following sections contain only basic information so you must deepen your understanding of the subject matter, such as reading more blog posts, news updates, and market analysis afterwards.
Limitations Must be Emphasized First
For now, individuals interested in greater exposure to investments in lead have limited choices. You can, for one thing, get exposure by purchasing contracts on the London Metal Exchange (LME) available in the market. You may consider physical exposure but it’s an impractical (i.e., non-economical) option, no thanks to lead’s low value/density ratio.
You can, for another thing, invest in equities for good returns on investments. But even here there are issues that must be handled well, said issues of which include the limited number of choice. You will find that pure plat exposure is a challenging proposition because many lead extraction companies mine the mineral in conjunction with many other products.
Fortunately, not everything is doom and gloom in lead investments! You will find several exchange traded futures (ETF) that can be used in getting both broad and targeted exposure. You can, for example, invest in a broad metal basket fund for your broad exposure at first and then in lead ETNs for your targeted exposure.
The bottom line: Lead investments has its potentials and challenges. You must have the right mindset coupled with the right education and information in making profitable decisions regarding your metal investments.
Ways In Making Lead Investments
There are two main ways in making your first lead investments.
You can find lead ETFs in several broad-based industrial metal exchange traded products (ETP) as well as the pure play ETP option. If you’re a beginner with a low tolerance for risks, your best choice is the broad-based industrial metal exchanges, such as the Dow Jones-UBS Industrial Metals ETN.
But if you’re looking for high rewards even with the high risks involved, then the pure play ETP option, such as the Dow Jones-UBS Lead ETN (LN) is a better choice. Just be sure that, indeed, you have the right mindset for it since there are several risks involved, such as the exposure to the credit risk associated with the issuing institution. This is because the LD prices doesn’t necessarily move alongside spot lead prices for a reason – the underlying assets aren’t the physical metal inventory itself but the futures contracts on the metal.
The London Metal Exchange is the marketplace for trading lead futures. Here, the prices for the lead futures are stated in U.S. dollars and cents as well as in per metric ton as a unit of measurement. The lead futures are also traded in 25-ton lot sizes; 25 tons is approximately equal to 55,000 pounds.
The lead metal is in ingots with at least 99.97% purity level, as well as conform to the BS EN 12659:1999 standards. If you’re interested in LME lead futures, be sure to look for the PB contract code to get started in the game. You can use several clearable currencies, such as the U.S. dollar, the European Union euro, the British sterling, and the Japanese yen.
There’s another option for making lead investments – buy the shares of companies that mine lead. The major companies include BHP Biliton, which trades in the London Stock Exchange (ticker symbol: BLT) and the New York Stock Exchange (ticker symbol: BHP), and Teck Resources (NYSE: TECK). There are also smaller companies engaged in lead mining where investments can be made.
But there are several issues with the stock investment route. You will find that your returns on investments aren’t as satisfactory because lead is generally extracted as a by-product of silver, zinc, and copper. You can add stock investments in these lead-producing companies but you may want to keep it comparatively smaller than in the lead ETFs and futures.
Lead as a metal is used in a wide range of consumer, commercial and industrial products. For this reason, the prices for lead ETFs and futures will be affected by the physical metal’s supply and demand. Be alert for the changes in supply and demand for the silvery metal so that your decisions will be smarter for it.