There is a great deal to look forward to with the use of precious metals in several of the fastest-growing areas of the economy.
Silver features prominently not just in the biotech industry and other traditional industrial settings, but is also now an indispensable component of solar panels and mobile devices.
The sister precious metal platinum and palladium, meanwhile, are used in the emissions systems of virtually all of the world's automobiles on the road today.
Of course, gold can be found in small amounts in all of these industries, particularly in the manufacture of microprocessors and small electronic parts.
Yet many investors are choosing to ignore how the various precious metals such as platinum, palladium, and silver, as well as industrial metals like copper, zinc, and nickel will all become vastly more important as solutions to humanity's environmental concerns continue to drive technological and economic innovation.
An Evolving Economy
Without completely casting aside gold as a financial asset, the other precious metals do have a strong case to be bullish about their role in tomorrow's economy. An executive of a small but well-known gold mining company made precisely this case at a recent symposium held in Vancouver.
Ivanhoe Mines (IVN) chairman Robert Friedland told the crowd that platinum and palladium, and especially copper, cobalt, and nickel will be major beneficiaries of the expansion of the so-called "green economy." This includes environmentally-conscious technologies, electric vehicles, and all sorts of technological methods for reducing environmental destruction. It's not just electric cars, either: automakers are developing innovative ways to make conventional engines far more fuel efficient, as well as offering more hybrid models.
He also explained how scarce cobalt and platinum (and, increasingly, copper) actually are in the earth's crust to illustrate how quickly a shift in demand could change the entire market for these metals. For instance, when comparing platinum to gold, Friedland mentioned that there are "no platinum reserves sitting in the central bank vaults." The same is true of copper. If annual production and supply fall short of future demand, there is no quick fix—only higher prices.
Ivanhoe Mines operates mining projects across Africa, primarily in the Democratic Republic of Congo and South Africa. While the company mines gold, it has also begun to diversify into these other industrial metals.
As Friedland points out, regardless of your opinions about the environmental sciences and their prevailing theories about man-made pollution and future climate catastrophe, command economies like China are going to aggressively respond to the environmental challenges a post-industrial global economy has created for itself. It is, in fact, already beginning. The use of precious metals for emissions reduction or other "green" initiatives is another part of that growing narrative. Not to mention that one of the unique properties of these "noble metals" is that they're so conducive to being recycled, even in the smallest of quantities.
Think about it: silver and gold have important applications in new technology like digital screens and photovoltaic solar cells. These metals will be central to the growth of various sectors of the economy most disrupted by technology, science, and innovation. At minimum, precious metals are carving out a durable role in these large (and expensive) green projects.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.