Investing in Base and Industrial Metals Using Exchange-Traded Funds

Investing in Base and Industrial Metals Using Exchange-Traded Funds

Exchange-traded funds, sometimes known as ETFs, offer investors several distinct entry points into the metals and mining industry as a whole. Some mining exchange traded funds make investments in businesses that are engaged in the exploration, the extraction process, and distribution of various metals and commodities.

Exchange-Traded Funds (ETFs) that invest in metals do so in a manner that is analogous to direct ownership of the underlying commodity or of futures contracts. ETFs that have outright ownership of the commodity will use the invested capital to purchase the target metal and then store it in a secure location. An alternative would be for the ETF to store futures agreements, which do not necessitate the actual delivery of the underlying commodity.

ETFs that track the price of metals might follow the price of a single metal, such as gold, or they can follow the price of a basket of precious or industrial metals. Gold, silver, platinum as well and palladium are examples of precious metals. Other examples of precious metals include rhodium and iridium. Even though they have applications in industry, precious metals are typically purchased not for their material properties but rather for their ability to serve as a store of value. Industrial metals, also known as base metals, are non-ferrous metals that are abundant and include copper, nickel, zinc, aluminum, and lead. They are far less scarce than precious metals and receive their value from the fact that they are used in the production of both raw materials and completed products.

In the following, we examine some of the major exchange-traded funds (ETFs) that provide tailored exposure to metal and mining.

Precious Metals
The ETF Physical PM Basket is a fund that tries to imitate the return from real gold, silver, palladium, and platinum by investing in a basket of various different precious metals. This fund invests in gold, silver, platinum, and palladium.

The SPDR Gold Trust is a fund that invests in real gold and has produced returns that historically have been very similar to those of the precious metal.

The NYSE Arca Gold Miners Index serves as a benchmark for the VanEck Vectors Gold Miners Exchange Traded Fund (ETF), which invests in gold mining firms.

Exotic exchange-traded funds (ETFs) are also on the market, and they are frequently traded. These ETFs offer returns that are either linked to the price of real gold or inverted to the price of gold. The ProShares Ultra Gold 3, which aims to deliver double the inverse performance of bullion, and the ProShares UltraShort Gold, which aims to provide double the return of bullion, are both examples of types of smart ETFs. Both of these ETFs aspire to double the performance of bullion.

The iShares Silver Trust, which seeks to replicate the return of physical silver, is the exchange-traded fund (ETF) that is both the largest and most popular in the silver market.

The goal of the Global X Silver Miners Exchange Traded Fund (ETF), which invests in silver mining firms, is to achieve returns that are comparable to or higher than those of the Solactive Global Silver Miners Index.


Through the ProShares UltraShort Silver, investors have the ability to short silver through the use of an exchange-traded fund. This exchange-traded fund aims to achieve a return that is twice as negative as the average return of the price of real silver.

The ETF actual Platinum is a type of exchange-traded fund (ETF) that seeks to replicate the returns that would be generated by investing in actual platinum. The First Trust ISE Global Platinum ETF is a type of exchange-traded fund (ETF) that specializes in the shares in platinum mining businesses and utilizes the ISE Global Platinum Index as its primary benchmark.

The Physical Palladium Trust provides investors with access to a closely related trust rather than a fund, and the returns on the trust are tied to returns on investments made in physical palladium. The financial performance of the trust is intended to mirror that of the price of palladium in its physical form.

Base Metals
The Invesco DB Base Metals ETF is a well-known base metals exchange-traded fund that had assets of more than $487 million as of the 31st of December, 2021.

The return performance that follows the Deutsche Bank Liquid Commodity Index-Optimum Return Industrial Metals Excess Return  is followed by the fund.

Copper Despite the fact that it is legally a note rather than a fund, the iPath DJ-UBS Copper SubTR ETN tries to replicate the performance of an unleveraged futures position in copper and constitutes the largest and most frequently traded copper exchange traded fund (ETF) in the world.

Investors favor both the Global X Copper Miners ETF and the First Trust ISE Global Copper ETF when it comes to copper mining exchange traded funds (ETFs). The former tries to mirror the performance that of the Solactive Global Copper Miners Index, while the latter follows the ISE Global Copper Index.

The iPath DJ-UBS Nickel SubTR ETN is the exchange-traded fund (ETF) that has the largest volume in trading for pure nickel.
According to the accepted definitions, this is a note as opposed to an ETF. It aims to replicate the performance of an unleveraged holding of nickel futures as closely as possible.

The Market Vectors Steel ETF, or SLX, is an exchange-traded fund that is focused on the steel business and aims to imitate the results of the NYSE Arca Steel Index.

Leave a Reply