How Do I Invest in Blue Gold?

If you’ve got a dynamic mix of gold, stocks and futures that run the gamut from speculative to safe holdings, you could be set for the long haul. But you may wish to join a growing audience of savvy investors who believe that adding blue gold to the mix makes perfect sense. Water has become more than a precious commodity needed to sustain life — especially since this finite resource is diminishing as a result of population growth and environmental change.

Step 1

Learn the history of blue gold. Not since 16th-century alchemists promised a fountain of youth by drinking liquid gold has a consumable like water become the darling of financial experts looking for the next big investment. Read about the history of people fighting and dying over water rights — particularly the catastrophic Dust Bowl of the early 1930s. Search out statistics that support your interest in investing in blue gold. For example, Martin Denholm of Investment U predicts that by 2050, water shortages are expected to impact 4 billion people, so if you need more proof that blue gold investing is hot, this is it.

Step 2

Understand myriad blue gold investment opportunities. Investigate the technology it takes to turn saltwater into potable drinking water, harness icebergs and find creative ways to reuse, recycle and repurpose water if you want to know how many industries are potential investment resources. Denholm estimates the annual global market for water is around $460 billion, so if you investigate companies leading the pack in water processing, filtration and desalinization —Nestle, Unilever, Watts Water Technologies, Amiad Filtration Systems, Energy Recovery Inc., Power Shares Global Water and Claymore S&P; Water — you can assess this niche’s diversity.

Step 3

Keep tabs on conferences, read white papers and patronize institutes studying technology that drives the blue gold market. For example, Citi Group sponsored a Water Investment Conference in 2012 showcasing water equipment innovators focused on global water trends. The International Water Asset Management Institute monitors water-related issues, including the burgeoning demand for ballast water to support hydraulic fracturing (fracking) that penetrates Earth's surface to mine for oil deposits. Since it takes millions of gallons of water to do this, you may wish to make fracking-related stocks, futures and commodities the core of your investment strategy.

Step 4

Create a balanced blue gold portfolio that pairs speculative products with safer investments. For example, the global shipping industry is a benefactor of new water-based technological advances. Thus firms producing state-of-the-art water filtration systems are predicted to thrive as a result. Get in on the ground floor of one of the most promising filtration innovations — forward osmosis — by investing in companies and technologies associated with FO. Of course, doing business with a broker who is as focused as you are on the future of blue gold can be your most important conduit to financial success.

Step 5

Get creative when searching for blue gold investment opportunities. The U.S. isn’t the only kid on the block these days. Just about every country — including developing nations using grants generated to find answers for water shortage dilemmas — is chasing technology, systems and methods to prepare for a future of water scarcity. Identify nations with the most extreme water shortages and look there for blue gold investment opportunities. From Australia to Japan to Africa —and particularly India and China — diversify your holdings so they represent a creative mix of international and domestic assets.

Step 6

Focus on water usage. It’s one thing to invest in technology that repurposes water. It’s another to monitor water usage issues so you know where your best investment opportunities can be found. For example, agriculture is one of the biggest consumers of freshwater — two-thirds of all water on Earth is used to irrigate crops, says Tim Bennett, deputy editor for the British publication “Money Week.” Aging pipes in the U.S. alone compose 700,000 miles of pipeline, much of which is 100 years old, says the Environmental Protection Agency, which is why keeping tabs on agriculture and city infrastructures can lead you to some valuable blue gold investment opportunities.

Photo Credits

  • water drops enters into water image by Denis Tabler from Fotolia.com

About the Author

Based in Chicago, Gail Cohen has been a professional writer for more than 30 years. She has authored and co-authored 14 books and penned hundreds of articles in consumer and trade publications, including the Illinois-based "Daily Herald" newspaper. Her newest book, "The Christmas Quilt," was published in December 2011.

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.