How to Invest in Mineral Stocks
Investing in the minerals market requires an understanding of the different types of minerals used and the volatility of the market. Minerals include such precious metals as gold and silver, as well as rare earth minerals that are used in electronics products. Investing in minerals can involve buying stocks in individual mining companies, in mutual funds that address a specific mineral or group of minerals or in companies that provide mining equipment.
Determine what kind of mineral you are interested in purchasing. The U.S. Geological Survey offers a list of the different commodities available in this country, which includes what each mineral is used for as well as a summary of the material's past performance. Research each mineral you are considering because every mineral has a wide variety in its outlook and performance.Step 2
Purchase stock in individual companies if you want direct exposure to specific markets, but be aware that this is a variable industry and individual company performance can vary even in a profitable sector.Step 3
Look into mineral exchange traded funds. These funds invest in multiple companies in either the same mineral sector or in diversified mineral options, and purchasing a share of the exchange traded fund gives you access to all the companies in the fund. Doing so offers less direct involvement in individual minerals and markets, but provides more stability.Step 4
Invest in companies affiliated with the mineral industry but not directly so. This can mean investing in companies that make mining equipment or companies that transport minerals to market. Doing so provides you exposure to the mineral field without requiring you to make a decision on the future performance of a given mineral.Step 5
Contact your broker and make your investment. Alternatively, many brokerage accounts allow you to make trades online. There may be minimum required investments by either your brokerage house or the investment vehicle as well as transaction fees.
- Some minerals are only mined in foreign countries, which may require you to make an international trade. If this is the case, and your brokerage account does not allow for international investments, you will need to contact a broker in that country and set up a new brokerage account for the trade.